Correlation Between Infinity Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Infinity Bank 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 Infinity Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infinity Bank and Dow Jones Industrial, you can compare the effects of market volatilities on Infinity Bank 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 Infinity Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infinity Bank and Dow Jones.
Diversification Opportunities for Infinity Bank and Dow Jones
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Infinity and Dow is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Bank 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 Infinity Bank 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 Infinity Bank 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 Infinity Bank i.e., Infinity Bank and Dow Jones go up and down completely randomly.
Pair Corralation between Infinity Bank and Dow Jones
Given the investment horizon of 90 days Infinity Bank is expected to generate 2.02 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Infinity Bank is 1.0 times less risky than Dow Jones. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. 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 |
Infinity Bank vs. Dow Jones Industrial
Performance |
| Timeline |
Infinity Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Infinity Bank
Pair trading matchups for Infinity Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Infinity Bank and Dow Jones
The main advantage of trading using opposite Infinity Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infinity Bank 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.| Infinity Bank vs. Piraeus Bank SA | Infinity Bank vs. Turkiye Garanti Bankasi | Infinity Bank vs. Delhi Bank Corp | Infinity Bank vs. Uwharrie Capital Corp |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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