Correlation Between COMMERCIAL VEHICLE and NIPPON PROLOGIS
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE and NIPPON PROLOGIS 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 COMMERCIAL VEHICLE and NIPPON PROLOGIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and NIPPON PROLOGIS REIT, you can compare the effects of market volatilities on COMMERCIAL VEHICLE and NIPPON PROLOGIS 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 COMMERCIAL VEHICLE with a short position of NIPPON PROLOGIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and NIPPON PROLOGIS.
Diversification Opportunities for COMMERCIAL VEHICLE and NIPPON PROLOGIS
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COMMERCIAL and NIPPON is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and NIPPON PROLOGIS REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON PROLOGIS REIT and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE are associated (or correlated) with NIPPON PROLOGIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON PROLOGIS REIT has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and NIPPON PROLOGIS go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and NIPPON PROLOGIS
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the NIPPON PROLOGIS. In addition to that, COMMERCIAL VEHICLE is 2.21 times more volatile than NIPPON PROLOGIS REIT. It trades about -0.05 of its total potential returns per unit of risk. NIPPON PROLOGIS REIT is currently generating about -0.05 per unit of volatility. If you would invest 222,000 in NIPPON PROLOGIS REIT on September 3, 2024 and sell it today you would lose (81,000) from holding NIPPON PROLOGIS REIT or give up 36.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. NIPPON PROLOGIS REIT
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| NIPPON PROLOGIS REIT |
COMMERCIAL VEHICLE and NIPPON PROLOGIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and NIPPON PROLOGIS
The main advantage of trading using opposite COMMERCIAL VEHICLE and NIPPON PROLOGIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE position performs unexpectedly, NIPPON PROLOGIS 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 NIPPON PROLOGIS will offset losses from the drop in NIPPON PROLOGIS's long position.| COMMERCIAL VEHICLE vs. JD SPORTS FASH | COMMERCIAL VEHICLE vs. ARISTOCRAT LEISURE | COMMERCIAL VEHICLE vs. United Utilities Group | COMMERCIAL VEHICLE vs. Columbia Sportswear |
| NIPPON PROLOGIS vs. COMMERCIAL VEHICLE | NIPPON PROLOGIS vs. VULCAN MATERIALS | NIPPON PROLOGIS vs. THRACE PLASTICS | NIPPON PROLOGIS vs. Commercial Vehicle Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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