Correlation Between Japan Post and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Japan Post and NORTHEAST UTILITIES 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 Japan Post and NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Japan Post and NORTHEAST UTILITIES 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 Japan Post with a short position of NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and NORTHEAST UTILITIES.
Diversification Opportunities for Japan Post and NORTHEAST UTILITIES
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and NORTHEAST is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and Japan Post 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 Japan Post Insurance are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Japan Post i.e., Japan Post and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Japan Post and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Japan Post Insurance is expected to under-perform the NORTHEAST UTILITIES. But the stock apears to be less risky and, when comparing its historical volatility, Japan Post Insurance is 1.04 times less risky than NORTHEAST UTILITIES. The stock trades about -0.04 of its potential returns per unit of risk. The NORTHEAST UTILITIES is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,775 in NORTHEAST UTILITIES on October 19, 2024 and sell it today you would lose (125.00) from holding NORTHEAST UTILITIES or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| Japan Post Insurance |
| NORTHEAST UTILITIES |
Japan Post and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and NORTHEAST UTILITIES
The main advantage of trading using opposite Japan Post and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Japan Post vs. MCEWEN MINING INC | Japan Post vs. Scandinavian Tobacco Group | Japan Post vs. Zoom Video Communications | Japan Post vs. JAPAN TOBACCO UNSPADR12 |
| NORTHEAST UTILITIES vs. SBI Insurance Group | NORTHEAST UTILITIES vs. Japan Post Insurance | NORTHEAST UTILITIES vs. CEOTRONICS | NORTHEAST UTILITIES vs. UNIQA INSURANCE GR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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