Correlation Between Japan Tobacco and NEXTEER AUTOMOTIVE
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and NEXTEER AUTOMOTIVE 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 NEXTEER AUTOMOTIVE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and NEXTEER AUTOMOTIVE , you can compare the effects of market volatilities on Japan Tobacco and NEXTEER AUTOMOTIVE 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 NEXTEER AUTOMOTIVE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and NEXTEER AUTOMOTIVE.
Diversification Opportunities for Japan Tobacco and NEXTEER AUTOMOTIVE
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and NEXTEER is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and NEXTEER AUTOMOTIVE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTEER AUTOMOTIVE 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 are associated (or correlated) with NEXTEER AUTOMOTIVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTEER AUTOMOTIVE has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and NEXTEER AUTOMOTIVE go up and down completely randomly.
Pair Corralation between Japan Tobacco and NEXTEER AUTOMOTIVE
Assuming the 90 days horizon Japan Tobacco is expected to generate 6.34 times less return on investment than NEXTEER AUTOMOTIVE. But when comparing it to its historical volatility, Japan Tobacco is 5.91 times less risky than NEXTEER AUTOMOTIVE. It trades about 0.14 of its potential returns per unit of risk. NEXTEER AUTOMOTIVE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 35.00 in NEXTEER AUTOMOTIVE on September 14, 2024 and sell it today you would earn a total of 7.00 from holding NEXTEER AUTOMOTIVE or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. NEXTEER AUTOMOTIVE
Performance |
| Timeline |
| Japan Tobacco |
| NEXTEER AUTOMOTIVE |
Japan Tobacco and NEXTEER AUTOMOTIVE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and NEXTEER AUTOMOTIVE
The main advantage of trading using opposite Japan Tobacco and NEXTEER AUTOMOTIVE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, NEXTEER AUTOMOTIVE 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 NEXTEER AUTOMOTIVE will offset losses from the drop in NEXTEER AUTOMOTIVE's long position.| Japan Tobacco vs. PARKEN Sport Entertainment | Japan Tobacco vs. Commercial Vehicle Group | Japan Tobacco vs. Motorcar Parts of | Japan Tobacco vs. Carsales |
| NEXTEER AUTOMOTIVE vs. Japan Tobacco | NEXTEER AUTOMOTIVE vs. JAPAN TOBACCO UNSPADR12 | NEXTEER AUTOMOTIVE vs. BRIT AMER TOBACCO | NEXTEER AUTOMOTIVE vs. Corporate Office Properties |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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