Correlation Between SIERRA METALS and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS 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 SIERRA METALS and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on SIERRA METALS 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 SIERRA METALS with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and JAPAN TOBACCO.
Diversification Opportunities for SIERRA METALS and JAPAN TOBACCO
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIERRA and JAPAN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS i.e., SIERRA METALS and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between SIERRA METALS and JAPAN TOBACCO
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 1.63 times more return on investment than JAPAN TOBACCO. However, SIERRA METALS is 1.63 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.15 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.11 per unit of risk. If you would invest 55.00 in SIERRA METALS on October 29, 2024 and sell it today you would earn a total of 3.00 from holding SIERRA METALS or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| SIERRA METALS |
| JAPAN TOBACCO UNSPADR12 |
SIERRA METALS and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and JAPAN TOBACCO
The main advantage of trading using opposite SIERRA METALS and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS 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.| SIERRA METALS vs. Ubisoft Entertainment SA | SIERRA METALS vs. CN MODERN DAIRY | SIERRA METALS vs. TOWNSQUARE MEDIA INC | SIERRA METALS vs. Nexstar Media Group |
| JAPAN TOBACCO vs. Magnachip Semiconductor | JAPAN TOBACCO vs. STMICROELECTRONICS | JAPAN TOBACCO vs. Taiwan Semiconductor Manufacturing | JAPAN TOBACCO vs. CLEAN ENERGY FUELS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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