Correlation Between City Of and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both City Of and JAPAN TOBACCO 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 City Of and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The City of and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on City Of and JAPAN TOBACCO 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 City Of with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Of and JAPAN TOBACCO.
Diversification Opportunities for City Of and JAPAN TOBACCO
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and JAPAN is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The City of and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and City Of 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 The City of are associated (or correlated) with JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of City Of i.e., City Of and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between City Of and JAPAN TOBACCO
Assuming the 90 days horizon City Of is expected to generate 1.7 times less return on investment than JAPAN TOBACCO. But when comparing it to its historical volatility, The City of is 1.19 times less risky than JAPAN TOBACCO. It trades about 0.04 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 934.00 in JAPAN TOBACCO UNSPADR12 on September 1, 2024 and sell it today you would earn a total of 336.00 from holding JAPAN TOBACCO UNSPADR12 or generate 35.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The City of vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| The City |
| JAPAN TOBACCO UNSPADR12 |
City Of and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Of and JAPAN TOBACCO
The main advantage of trading using opposite City Of and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Of position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| City Of vs. Aegean Airlines SA | City Of vs. JSC Halyk bank | City Of vs. GREENX METALS LTD | City Of vs. Southwest Airlines Co |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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