Correlation Between IPath Global and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both IPath Global 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 IPath Global and Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPath Global Carbon and Nippon Steel Corp, you can compare the effects of market volatilities on IPath Global 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 IPath Global with a short position of Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Global and Nippon Steel.
Diversification Opportunities for IPath Global and Nippon Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPath and Nippon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding IPath Global Carbon and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp and IPath Global 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 IPath Global Carbon 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 Corp has no effect on the direction of IPath Global i.e., IPath Global and Nippon Steel go up and down completely randomly.
Pair Corralation between IPath Global and Nippon Steel
If you would invest 11,283 in IPath Global Carbon on October 22, 2024 and sell it today you would earn a total of 0.00 from holding IPath Global Carbon or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.81% |
| Values | Daily Returns |
IPath Global Carbon vs. Nippon Steel Corp
Performance |
| Timeline |
| IPath Global Carbon |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nippon Steel Corp |
IPath Global and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Global and Nippon Steel
The main advantage of trading using opposite IPath Global and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Global 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.The idea behind IPath Global Carbon and Nippon Steel Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nippon Steel vs. Olympic Steel | Nippon Steel vs. POSCO Holdings | Nippon Steel vs. Steel Dynamics | Nippon Steel vs. Universal Stainless Alloy |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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