Correlation Between Intercontinental and Japan Exchange
Can any of the company-specific risk be diversified away by investing in both Intercontinental and Japan Exchange 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 Intercontinental and Japan Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercontinental Exchange and Japan Exchange Group, you can compare the effects of market volatilities on Intercontinental and Japan Exchange 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 Intercontinental with a short position of Japan Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercontinental and Japan Exchange.
Diversification Opportunities for Intercontinental and Japan Exchange
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intercontinental and Japan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intercontinental Exchange and Japan Exchange Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Exchange Group and Intercontinental 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 Intercontinental Exchange are associated (or correlated) with Japan Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Exchange Group has no effect on the direction of Intercontinental i.e., Intercontinental and Japan Exchange go up and down completely randomly.
Pair Corralation between Intercontinental and Japan Exchange
Considering the 90-day investment horizon Intercontinental is expected to generate 1.23 times less return on investment than Japan Exchange. But when comparing it to its historical volatility, Intercontinental Exchange is 1.73 times less risky than Japan Exchange. It trades about 0.11 of its potential returns per unit of risk. Japan Exchange Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Japan Exchange Group on September 12, 2024 and sell it today you would earn a total of 400.00 from holding Japan Exchange Group or generate 47.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Intercontinental Exchange vs. Japan Exchange Group
Performance |
| Timeline |
| Intercontinental Exchange |
| Japan Exchange Group |
Intercontinental and Japan Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercontinental and Japan Exchange
The main advantage of trading using opposite Intercontinental and Japan Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercontinental position performs unexpectedly, Japan Exchange 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 Exchange will offset losses from the drop in Japan Exchange's long position.| Intercontinental vs. SP Global | Intercontinental vs. Moodys | Intercontinental vs. MSCI Inc | Intercontinental vs. FactSet Research Systems |
| Japan Exchange vs. Moodys | Japan Exchange vs. MSCI Inc | Japan Exchange vs. Intercontinental Exchange | Japan Exchange vs. CME 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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