Correlation Between Dow Jones and Infrax Systems
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Infrax Systems 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 Dow Jones and Infrax Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Infrax Systems, you can compare the effects of market volatilities on Dow Jones and Infrax Systems 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 Dow Jones with a short position of Infrax Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Infrax Systems.
Diversification Opportunities for Dow Jones and Infrax Systems
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Infrax is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Infrax Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrax Systems and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Infrax Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrax Systems has no effect on the direction of Dow Jones i.e., Dow Jones and Infrax Systems go up and down completely randomly.
Pair Corralation between Dow Jones and Infrax Systems
Assuming the 90 days trading horizon Dow Jones is expected to generate 7.94 times less return on investment than Infrax Systems. But when comparing it to its historical volatility, Dow Jones Industrial is 20.19 times less risky than Infrax Systems. It trades about 0.16 of its potential returns per unit of risk. Infrax Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.05 in Infrax Systems on September 1, 2024 and sell it today you would lose (0.01) from holding Infrax Systems or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Infrax Systems
Performance |
| Timeline |
Dow Jones and Infrax Systems Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Infrax Systems
Pair trading matchups for Infrax Systems
Pair Trading with Dow Jones and Infrax Systems
The main advantage of trading using opposite Dow Jones and Infrax Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Infrax Systems 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 Infrax Systems will offset losses from the drop in Infrax Systems' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Infrax Systems vs. SPENN Technology AS | Infrax Systems vs. OFX Group Ltd | Infrax Systems vs. Pinetree Capital | Infrax Systems vs. GreenBank Capital |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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