Correlation Between Japan Tobacco and Old Republic
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on Japan Tobacco and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Old Republic.
Diversification Opportunities for Japan Tobacco and Old Republic
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Old is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Old Republic go up and down completely randomly.
Pair Corralation between Japan Tobacco and Old Republic
Assuming the 90 days horizon Japan Tobacco is expected to generate 2.01 times less return on investment than Old Republic. In addition to that, Japan Tobacco is 1.07 times more volatile than Old Republic International. It trades about 0.06 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.12 per unit of volatility. If you would invest 2,429 in Old Republic International on August 31, 2024 and sell it today you would earn a total of 1,468 from holding Old Republic International or generate 60.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Japan Tobacco ADR vs. Old Republic International
Performance |
| Timeline |
| Japan Tobacco ADR |
| Old Republic Interna |
Japan Tobacco and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Old Republic
The main advantage of trading using opposite Japan Tobacco and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic'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 |
| Old Republic vs. American International Group | Old Republic vs. Hartford Financial Services | Old Republic vs. Goosehead Insurance | Old Republic vs. Enstar Group Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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