Correlation Between Aozora Bank and Grizzly Discoveries
Can any of the company-specific risk be diversified away by investing in both Aozora Bank and Grizzly Discoveries 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 Aozora Bank and Grizzly Discoveries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aozora Bank and Grizzly Discoveries, you can compare the effects of market volatilities on Aozora Bank and Grizzly Discoveries 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 Aozora Bank with a short position of Grizzly Discoveries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and Grizzly Discoveries.
Diversification Opportunities for Aozora Bank and Grizzly Discoveries
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aozora and Grizzly is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and Grizzly Discoveries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grizzly Discoveries and Aozora Bank 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 Aozora Bank are associated (or correlated) with Grizzly Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grizzly Discoveries has no effect on the direction of Aozora Bank i.e., Aozora Bank and Grizzly Discoveries go up and down completely randomly.
Pair Corralation between Aozora Bank and Grizzly Discoveries
Assuming the 90 days horizon Aozora Bank is expected to under-perform the Grizzly Discoveries. But the stock apears to be less risky and, when comparing its historical volatility, Aozora Bank is 22.09 times less risky than Grizzly Discoveries. The stock trades about -0.01 of its potential returns per unit of risk. The Grizzly Discoveries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6.50 in Grizzly Discoveries on September 14, 2024 and sell it today you would lose (6.45) from holding Grizzly Discoveries or give up 99.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aozora Bank vs. Grizzly Discoveries
Performance |
| Timeline |
| Aozora Bank |
| Grizzly Discoveries |
Aozora Bank and Grizzly Discoveries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aozora Bank and Grizzly Discoveries
The main advantage of trading using opposite Aozora Bank and Grizzly Discoveries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank position performs unexpectedly, Grizzly Discoveries 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 Grizzly Discoveries will offset losses from the drop in Grizzly Discoveries' long position.| Aozora Bank vs. Mitsui Chemicals | Aozora Bank vs. FLOW TRADERS LTD | Aozora Bank vs. MCEWEN MINING INC | Aozora Bank vs. MARKET VECTR RETAIL |
| Grizzly Discoveries vs. TFS FINANCIAL | Grizzly Discoveries vs. Regions Financial | Grizzly Discoveries vs. Aozora Bank | Grizzly Discoveries vs. TRADEGATE |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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