Correlation Between Central Japan and Freightcar America
Can any of the company-specific risk be diversified away by investing in both Central Japan and Freightcar America 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 Central Japan and Freightcar America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Japan Railway and Freightcar America, you can compare the effects of market volatilities on Central Japan and Freightcar America 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 Central Japan with a short position of Freightcar America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Japan and Freightcar America.
Diversification Opportunities for Central Japan and Freightcar America
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Freightcar is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Central Japan Railway and Freightcar America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightcar America and Central Japan 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 Central Japan Railway are associated (or correlated) with Freightcar America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightcar America has no effect on the direction of Central Japan i.e., Central Japan and Freightcar America go up and down completely randomly.
Pair Corralation between Central Japan and Freightcar America
Assuming the 90 days horizon Central Japan Railway is expected to generate 0.11 times more return on investment than Freightcar America. However, Central Japan Railway is 9.18 times less risky than Freightcar America. It trades about 0.03 of its potential returns per unit of risk. Freightcar America is currently generating about -0.13 per unit of risk. If you would invest 1,019 in Central Japan Railway on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Central Japan Railway or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Japan Railway vs. Freightcar America
Performance |
| Timeline |
| Central Japan Railway |
| Freightcar America |
Central Japan and Freightcar America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Japan and Freightcar America
The main advantage of trading using opposite Central Japan and Freightcar America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Japan position performs unexpectedly, Freightcar America 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 Freightcar America will offset losses from the drop in Freightcar America's long position.| Central Japan vs. West Japan Railway | Central Japan vs. LB Foster | Central Japan vs. East Japan Railway | Central Japan vs. Canadian National Railway |
| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. CSX Corporation | Freightcar America vs. Norfolk Southern |
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.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |