Correlation Between InfraCap Equity and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both InfraCap Equity and Dow Jones 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 InfraCap Equity and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfraCap Equity Income and Dow Jones Industrial, you can compare the effects of market volatilities on InfraCap Equity and Dow Jones 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 InfraCap Equity with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap Equity and Dow Jones.

Diversification Opportunities for InfraCap Equity and Dow Jones

InfraCapDowDiversified AwayInfraCapDowDiversified Away100%
0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between InfraCap and Dow is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap Equity Income and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and InfraCap Equity 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 InfraCap Equity Income are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of InfraCap Equity i.e., InfraCap Equity and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between InfraCap Equity and Dow Jones

Given the investment horizon of 90 days InfraCap Equity Income is expected to generate 0.97 times more return on investment than Dow Jones. However, InfraCap Equity Income is 1.03 times less risky than Dow Jones. It trades about -0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.17 per unit of risk. If you would invest  2,721  in InfraCap Equity Income on November 25, 2024 and sell it today you would lose (57.00) from holding InfraCap Equity Income or give up 2.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

InfraCap Equity Income  vs.  Dow Jones Industrial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-2024
JavaScript chart by amCharts 3.21.15ICAP DJI
       Timeline  

InfraCap Equity and Dow Jones Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.54-1.15-0.76-0.37-0.02580.280.671.061.451.84 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15ICAP DJI
       Returns  

Pair Trading with InfraCap Equity and Dow Jones

The main advantage of trading using opposite InfraCap Equity and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap Equity position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.
The idea behind InfraCap Equity Income and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Fundamental Analysis
View fundamental data based on most recent published financial statements
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum