Correlation Between Japan Asia and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Japan Asia and EDISON INTL 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 EDISON INTL 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 EDISON INTL, you can compare the effects of market volatilities on Japan Asia and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and EDISON INTL.
Diversification Opportunities for Japan Asia and EDISON INTL
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and EDISON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Japan Asia i.e., Japan Asia and EDISON INTL go up and down completely randomly.
Pair Corralation between Japan Asia and EDISON INTL
Assuming the 90 days horizon Japan Asia is expected to generate 1.66 times less return on investment than EDISON INTL. In addition to that, Japan Asia is 1.06 times more volatile than EDISON INTL. It trades about 0.21 of its total potential returns per unit of risk. EDISON INTL is currently generating about 0.38 per unit of volatility. If you would invest 7,392 in EDISON INTL on September 3, 2024 and sell it today you would earn a total of 922.00 from holding EDISON INTL or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. EDISON INTL
Performance |
| Timeline |
| Japan Asia Investment |
| EDISON INTL |
Japan Asia and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and EDISON INTL
The main advantage of trading using opposite Japan Asia and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| Japan Asia vs. Blackstone Group | Japan Asia vs. BlackRock | Japan Asia vs. The Bank of | Japan Asia vs. Ameriprise Financial |
| EDISON INTL vs. SEI INVESTMENTS | EDISON INTL vs. Gladstone Investment | EDISON INTL vs. Westlake Chemical | EDISON INTL vs. Japan Asia Investment |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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