Correlation Between Japan Asia and Bank Of
Can any of the company-specific risk be diversified away by investing in both Japan Asia and Bank Of 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 Japan Asia and Bank Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and The Bank of, you can compare the effects of market volatilities on Japan Asia and Bank Of 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 Japan Asia with a short position of Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Bank Of.
Diversification Opportunities for Japan Asia and Bank Of
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and Bank is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank and Japan Asia 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 Japan Asia Investment are associated (or correlated) with Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Japan Asia i.e., Japan Asia and Bank Of go up and down completely randomly.
Pair Corralation between Japan Asia and Bank Of
Assuming the 90 days horizon Japan Asia is expected to generate 1.51 times less return on investment than Bank Of. But when comparing it to its historical volatility, Japan Asia Investment is 1.09 times less risky than Bank Of. It trades about 0.18 of its potential returns per unit of risk. The Bank of is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 7,076 in The Bank of on August 30, 2024 and sell it today you would earn a total of 646.00 from holding The Bank of or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Japan Asia Investment vs. The Bank of
Performance |
| Timeline |
| Japan Asia Investment |
| The Bank |
Japan Asia and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Bank Of
The main advantage of trading using opposite Japan Asia and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of's long position.The idea behind Japan Asia Investment and The Bank of 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.| Bank Of vs. BE Semiconductor Industries | Bank Of vs. Corporate Travel Management | Bank Of vs. Perdoceo Education | Bank Of vs. Ares Management Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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