Correlation Between OAKTRSPECLENDNEW and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both OAKTRSPECLENDNEW and NIPPON STEEL 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 OAKTRSPECLENDNEW and NIPPON STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OAKTRSPECLENDNEW and NIPPON STEEL SPADR, you can compare the effects of market volatilities on OAKTRSPECLENDNEW and NIPPON STEEL 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 OAKTRSPECLENDNEW with a short position of NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OAKTRSPECLENDNEW and NIPPON STEEL.
Diversification Opportunities for OAKTRSPECLENDNEW and NIPPON STEEL
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OAKTRSPECLENDNEW and NIPPON is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding OAKTRSPECLENDNEW and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW are associated (or correlated) with NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of OAKTRSPECLENDNEW i.e., OAKTRSPECLENDNEW and NIPPON STEEL go up and down completely randomly.
Pair Corralation between OAKTRSPECLENDNEW and NIPPON STEEL
Assuming the 90 days trading horizon OAKTRSPECLENDNEW is expected to generate 1.28 times more return on investment than NIPPON STEEL. However, OAKTRSPECLENDNEW is 1.28 times more volatile than NIPPON STEEL SPADR. It trades about 0.09 of its potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.12 per unit of risk. If you would invest 1,478 in OAKTRSPECLENDNEW on September 1, 2024 and sell it today you would earn a total of 48.00 from holding OAKTRSPECLENDNEW or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OAKTRSPECLENDNEW vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| OAKTRSPECLENDNEW |
| NIPPON STEEL SPADR |
OAKTRSPECLENDNEW and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OAKTRSPECLENDNEW and NIPPON STEEL
The main advantage of trading using opposite OAKTRSPECLENDNEW and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OAKTRSPECLENDNEW position performs unexpectedly, NIPPON STEEL 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 STEEL will offset losses from the drop in NIPPON STEEL's long position.| OAKTRSPECLENDNEW vs. ACCSYS TECHPLC EO | OAKTRSPECLENDNEW vs. Coor Service Management | OAKTRSPECLENDNEW vs. Axcelis Technologies | OAKTRSPECLENDNEW vs. NAKED WINES PLC |
| NIPPON STEEL vs. BANKINTER ADR 2007 | NIPPON STEEL vs. Regions Financial | NIPPON STEEL vs. OAKTRSPECLENDNEW | NIPPON STEEL vs. National Bank Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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