Correlation Between Japan Tobacco and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Japan Tobacco and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Skechers USA.
Diversification Opportunities for Japan Tobacco and Skechers USA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Skechers is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Skechers USA go up and down completely randomly.
Pair Corralation between Japan Tobacco and Skechers USA
Assuming the 90 days horizon Japan Tobacco is expected to generate 1.68 times less return on investment than Skechers USA. But when comparing it to its historical volatility, Japan Tobacco ADR is 1.73 times less risky than Skechers USA. It trades about 0.06 of its potential returns per unit of risk. Skechers USA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,189 in Skechers USA on September 19, 2024 and sell it today you would earn a total of 2,417 from holding Skechers USA or generate 57.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Japan Tobacco ADR vs. Skechers USA
Performance |
| Timeline |
| Japan Tobacco ADR |
| Skechers USA |
Japan Tobacco and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Skechers USA
The main advantage of trading using opposite Japan Tobacco and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |