Correlation Between Casio Computer and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Casio Computer and ENDESA ADR 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 Casio Computer and ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casio Computer CoLtd and ENDESA ADR 12, you can compare the effects of market volatilities on Casio Computer and ENDESA ADR 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 Casio Computer with a short position of ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and ENDESA ADR.
Diversification Opportunities for Casio Computer and ENDESA ADR
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Casio and ENDESA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 and Casio Computer 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 Casio Computer CoLtd are associated (or correlated) with ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Casio Computer i.e., Casio Computer and ENDESA ADR go up and down completely randomly.
Pair Corralation between Casio Computer and ENDESA ADR
Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the ENDESA ADR. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.21 times less risky than ENDESA ADR. The stock trades about -0.1 of its potential returns per unit of risk. The ENDESA ADR 12 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 940.00 in ENDESA ADR 12 on October 25, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Casio Computer CoLtd vs. ENDESA ADR 12
Performance |
| Timeline |
| Casio Computer CoLtd |
| ENDESA ADR 12 |
Casio Computer and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casio Computer and ENDESA ADR
The main advantage of trading using opposite Casio Computer and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, ENDESA ADR 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 ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.| Casio Computer vs. CHRYSALIS INVESTMENTS LTD | Casio Computer vs. Entravision Communications | Casio Computer vs. FIRST SAVINGS FINL | Casio Computer vs. HUTCHISON TELECOMM |
| ENDESA ADR vs. GAZTRTECHNIUADR15EO01 | ENDESA ADR vs. ANGLO ASIAN MINING | ENDESA ADR vs. Agilent Technologies | ENDESA ADR vs. Minerals Technologies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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