Correlation Between Panasonic Corp and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both Panasonic Corp and Guaranty Trust 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 Panasonic Corp and Guaranty Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panasonic Corp and Guaranty Trust Holding, you can compare the effects of market volatilities on Panasonic Corp and Guaranty Trust 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 Panasonic Corp with a short position of Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panasonic Corp and Guaranty Trust.
Diversification Opportunities for Panasonic Corp and Guaranty Trust
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Panasonic and Guaranty is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Panasonic Corp and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding and Panasonic Corp 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 Panasonic Corp are associated (or correlated) with Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Panasonic Corp i.e., Panasonic Corp and Guaranty Trust go up and down completely randomly.
Pair Corralation between Panasonic Corp and Guaranty Trust
Assuming the 90 days trading horizon Panasonic Corp is expected to generate 1.59 times more return on investment than Guaranty Trust. However, Panasonic Corp is 1.59 times more volatile than Guaranty Trust Holding. It trades about 0.44 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.04 per unit of risk. If you would invest 124,450 in Panasonic Corp on August 29, 2024 and sell it today you would earn a total of 23,450 from holding Panasonic Corp or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 52.17% |
| Values | Daily Returns |
Panasonic Corp vs. Guaranty Trust Holding
Performance |
| Timeline |
| Panasonic Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Guaranty Trust Holding |
Panasonic Corp and Guaranty Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panasonic Corp and Guaranty Trust
The main advantage of trading using opposite Panasonic Corp and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panasonic Corp position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.| Panasonic Corp vs. Samsung Electronics Co | Panasonic Corp vs. Samsung Electronics Co | Panasonic Corp vs. Toyota Motor Corp | Panasonic Corp vs. Reliance Industries Ltd |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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