Correlation Between Japan Tobacco and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and FTAI Aviation 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 Tobacco and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco ADR and FTAI Aviation Ltd, you can compare the effects of market volatilities on Japan Tobacco and FTAI Aviation 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 Tobacco with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and FTAI Aviation.
Diversification Opportunities for Japan Tobacco and FTAI Aviation
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Japan and FTAI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Japan Tobacco 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 Tobacco ADR are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and FTAI Aviation go up and down completely randomly.
Pair Corralation between Japan Tobacco and FTAI Aviation
Assuming the 90 days horizon Japan Tobacco ADR is expected to under-perform the FTAI Aviation. In addition to that, Japan Tobacco is 1.39 times more volatile than FTAI Aviation Ltd. It trades about -0.02 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.16 per unit of volatility. If you would invest 2,574 in FTAI Aviation Ltd on September 2, 2024 and sell it today you would earn a total of 214.00 from holding FTAI Aviation Ltd or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco ADR vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Japan Tobacco ADR |
| FTAI Aviation |
Japan Tobacco and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and FTAI Aviation
The main advantage of trading using opposite Japan Tobacco and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco |
| FTAI Aviation vs. SunOpta | FTAI Aviation vs. Grocery Outlet Holding | FTAI Aviation vs. SNDL Inc | FTAI Aviation vs. NH Foods Ltd |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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