Correlation Between Infosys and Pinterest
Can any of the company-specific risk be diversified away by investing in both Infosys and Pinterest 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 Infosys and Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Ltd ADR and Pinterest, you can compare the effects of market volatilities on Infosys and Pinterest 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 Infosys with a short position of Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Pinterest.
Diversification Opportunities for Infosys and Pinterest
Good diversification
The 3 months correlation between Infosys and Pinterest is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and Infosys 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 Infosys Ltd ADR are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Infosys i.e., Infosys and Pinterest go up and down completely randomly.
Pair Corralation between Infosys and Pinterest
Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.4 times more return on investment than Pinterest. However, Infosys Ltd ADR is 2.52 times less risky than Pinterest. It trades about 0.14 of its potential returns per unit of risk. Pinterest is currently generating about -0.05 per unit of risk. If you would invest 2,180 in Infosys Ltd ADR on August 25, 2024 and sell it today you would earn a total of 99.00 from holding Infosys Ltd ADR or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Ltd ADR vs. Pinterest
Performance |
| Timeline |
| Infosys Ltd ADR |
Infosys and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and Pinterest
The main advantage of trading using opposite Infosys and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.| Infosys vs. Cognizant Technology Solutions | Infosys vs. WNS Holdings | Infosys vs. CLARIVATE PLC | Infosys vs. Gartner |
| Pinterest vs. Alphabet Inc Class C | Pinterest vs. Twilio Inc | Pinterest vs. Snap Inc | Pinterest vs. Baidu Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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