Correlation Between Canadian National and East Japan
Can any of the company-specific risk be diversified away by investing in both Canadian National and East Japan 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 Canadian National and East Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and East Japan Railway, you can compare the effects of market volatilities on Canadian National and East Japan 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 Canadian National with a short position of East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and East Japan.
Diversification Opportunities for Canadian National and East Japan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and East is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway and Canadian National 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 Canadian National Railway are associated (or correlated) with East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of Canadian National i.e., Canadian National and East Japan go up and down completely randomly.
Pair Corralation between Canadian National and East Japan
Assuming the 90 days horizon Canadian National Railway is expected to under-perform the East Japan. But the stock apears to be less risky and, when comparing its historical volatility, Canadian National Railway is 2.09 times less risky than East Japan. The stock trades about -0.31 of its potential returns per unit of risk. The East Japan Railway is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,736 in East Japan Railway on September 27, 2024 and sell it today you would lose (59.00) from holding East Japan Railway or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian National Railway vs. East Japan Railway
Performance |
| Timeline |
| Canadian National Railway |
| East Japan Railway |
Canadian National and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian National and East Japan
The main advantage of trading using opposite Canadian National and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.| Canadian National vs. MTR Limited | Canadian National vs. CRRC Limited | Canadian National vs. Central Japan Railway | Canadian National vs. East Japan Railway |
| East Japan vs. Canadian National Railway | East Japan vs. MTR Limited | East Japan vs. CRRC Limited | East Japan vs. Central Japan Railway |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |