Correlation Between BP Prudhoe and Infosys
Can any of the company-specific risk be diversified away by investing in both BP Prudhoe and Infosys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BP Prudhoe and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Prudhoe Bay and Infosys Limited, you can compare the effects of market volatilities on BP Prudhoe and Infosys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BP Prudhoe with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and Infosys.
Diversification Opportunities for BP Prudhoe and Infosys
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMI and Infosys is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and BP Prudhoe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BP Prudhoe Bay are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and Infosys go up and down completely randomly.
Pair Corralation between BP Prudhoe and Infosys
Assuming the 90 days horizon BP Prudhoe Bay is expected to under-perform the Infosys. In addition to that, BP Prudhoe is 2.84 times more volatile than Infosys Limited. It trades about -0.21 of its total potential returns per unit of risk. Infosys Limited is currently generating about 0.07 per unit of volatility. If you would invest 2,100 in Infosys Limited on September 24, 2024 and sell it today you would earn a total of 80.00 from holding Infosys Limited or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Prudhoe Bay vs. Infosys Limited
Performance |
| Timeline |
| BP Prudhoe Bay |
| Infosys Limited |
BP Prudhoe and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Prudhoe and Infosys
The main advantage of trading using opposite BP Prudhoe and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe position performs unexpectedly, Infosys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Infosys will offset losses from the drop in Infosys' long position.| BP Prudhoe vs. Reliance Industries Limited | BP Prudhoe vs. Marathon Petroleum Corp | BP Prudhoe vs. Valero Energy | BP Prudhoe vs. Neste Oyj |
| Infosys vs. Accenture plc | Infosys vs. International Business Machines | Infosys vs. Cognizant Technology Solutions | Infosys vs. AMADEUS IT GRP |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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