Correlation Between XP Infra and Dow Jones
Can any of the company-specific risk be diversified away by investing in both XP Infra 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 XP Infra and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XP Infra Fund and Dow Jones Industrial, you can compare the effects of market volatilities on XP Infra 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 XP Infra with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of XP Infra and Dow Jones.
Diversification Opportunities for XP Infra and Dow Jones
Pay attention - limited upside
The 3 months correlation between XPIE11 and Dow is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding XP Infra Fund 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 XP Infra 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 XP Infra Fund 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 XP Infra i.e., XP Infra and Dow Jones go up and down completely randomly.
Pair Corralation between XP Infra and Dow Jones
Assuming the 90 days trading horizon XP Infra Fund is expected to under-perform the Dow Jones. In addition to that, XP Infra is 1.18 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,326,977 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,102,674 from holding Dow Jones Industrial or generate 33.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
XP Infra Fund vs. Dow Jones Industrial
Performance |
| Timeline |
XP Infra and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
XP Infra Fund
Pair trading matchups for XP Infra
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with XP Infra and Dow Jones
The main advantage of trading using opposite XP Infra and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XP Infra 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.| XP Infra vs. RB Capital Office | XP Infra vs. Ishares Msci Brazil | XP Infra vs. Investo Etf Global | XP Infra vs. iShares BMFBovespa Small |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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