Correlation Between Wipro Limited and Infosys
Can any of the company-specific risk be diversified away by investing in both Wipro Limited and Infosys 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 Wipro Limited and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wipro Limited ADR and Infosys Ltd ADR, you can compare the effects of market volatilities on Wipro Limited and Infosys 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 Wipro Limited with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wipro Limited and Infosys.
Diversification Opportunities for Wipro Limited and Infosys
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wipro and Infosys is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wipro Limited ADR and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Wipro Limited 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 Wipro Limited ADR are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Wipro Limited i.e., Wipro Limited and Infosys go up and down completely randomly.
Pair Corralation between Wipro Limited and Infosys
Considering the 90-day investment horizon Wipro Limited is expected to generate 1.26 times less return on investment than Infosys. In addition to that, Wipro Limited is 1.15 times more volatile than Infosys Ltd ADR. It trades about 0.1 of its total potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.15 per unit of volatility. If you would invest 2,182 in Infosys Ltd ADR on August 27, 2024 and sell it today you would earn a total of 97.00 from holding Infosys Ltd ADR or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wipro Limited ADR vs. Infosys Ltd ADR
Performance |
| Timeline |
| Wipro Limited ADR |
| Infosys Ltd ADR |
Wipro Limited and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wipro Limited and Infosys
The main advantage of trading using opposite Wipro Limited and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wipro Limited position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Wipro Limited vs. Cognizant Technology Solutions | Wipro Limited vs. Accenture plc | Wipro Limited vs. Gartner | Wipro Limited vs. Infosys Ltd ADR |
| Infosys vs. Data Storage Corp | Infosys vs. Usio Inc | Infosys vs. ARB IOT Group | Infosys vs. FiscalNote Holdings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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