Correlation Between Japan Tobacco and AMAZONCOM
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By analyzing existing cross correlation between Japan Tobacco ADR and AMAZONCOM INC, you can compare the effects of market volatilities on Japan Tobacco and AMAZONCOM 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 AMAZONCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and AMAZONCOM.
Diversification Opportunities for Japan Tobacco and AMAZONCOM
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Japan and AMAZONCOM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and AMAZONCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZONCOM INC 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 AMAZONCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZONCOM INC has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and AMAZONCOM go up and down completely randomly.
Pair Corralation between Japan Tobacco and AMAZONCOM
Assuming the 90 days horizon Japan Tobacco ADR is expected to generate 1.22 times more return on investment than AMAZONCOM. However, Japan Tobacco is 1.22 times more volatile than AMAZONCOM INC. It trades about 0.05 of its potential returns per unit of risk. AMAZONCOM INC is currently generating about 0.01 per unit of risk. If you would invest 1,377 in Japan Tobacco ADR on August 31, 2024 and sell it today you would earn a total of 16.00 from holding Japan Tobacco ADR or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Japan Tobacco ADR vs. AMAZONCOM INC
Performance |
| Timeline |
| Japan Tobacco ADR |
| AMAZONCOM INC |
Japan Tobacco and AMAZONCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and AMAZONCOM
The main advantage of trading using opposite Japan Tobacco and AMAZONCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, AMAZONCOM 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 AMAZONCOM will offset losses from the drop in AMAZONCOM'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 |
| AMAZONCOM vs. Dalata Hotel Group | AMAZONCOM vs. Palomar Holdings | AMAZONCOM vs. Kinsale Capital Group | AMAZONCOM vs. Cincinnati Financial |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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