Correlation Between Dow Jones and Infinity Bank
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Infinity Bank 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 Infinity Bank 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 Infinity Bank, you can compare the effects of market volatilities on Dow Jones and Infinity Bank 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 Infinity Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Infinity Bank.
Diversification Opportunities for Dow Jones and Infinity Bank
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Infinity is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Infinity Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Bank 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 Infinity Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Bank has no effect on the direction of Dow Jones i.e., Dow Jones and Infinity Bank go up and down completely randomly.
Pair Corralation between Dow Jones and Infinity Bank
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.0 times more return on investment than Infinity Bank. However, Dow Jones is 1.0 times more volatile than Infinity Bank. It trades about 0.37 of its potential returns per unit of risk. Infinity Bank is currently generating about 0.18 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Infinity Bank
Performance |
| Timeline |
Dow Jones and Infinity Bank Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Infinity Bank
Pair trading matchups for Infinity Bank
Pair Trading with Dow Jones and Infinity Bank
The main advantage of trading using opposite Dow Jones and Infinity Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Infinity Bank 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 Infinity Bank will offset losses from the drop in Infinity Bank's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Infinity Bank vs. Piraeus Bank SA | Infinity Bank vs. Turkiye Garanti Bankasi | Infinity Bank vs. Delhi Bank Corp | Infinity Bank vs. Uwharrie Capital Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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