Correlation Between Japan Tobacco and HACKETT GROUP
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and HACKETT GROUP 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 HACKETT GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and HACKETT GROUP, you can compare the effects of market volatilities on Japan Tobacco and HACKETT GROUP 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 HACKETT GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and HACKETT GROUP.
Diversification Opportunities for Japan Tobacco and HACKETT GROUP
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and HACKETT is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and HACKETT GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HACKETT GROUP 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 HACKETT GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HACKETT GROUP has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and HACKETT GROUP go up and down completely randomly.
Pair Corralation between Japan Tobacco and HACKETT GROUP
Assuming the 90 days horizon Japan Tobacco is expected to under-perform the HACKETT GROUP. In addition to that, Japan Tobacco is 1.31 times more volatile than HACKETT GROUP. It trades about -0.08 of its total potential returns per unit of risk. HACKETT GROUP is currently generating about -0.02 per unit of volatility. If you would invest 2,940 in HACKETT GROUP on October 25, 2024 and sell it today you would lose (20.00) from holding HACKETT GROUP or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Japan Tobacco vs. HACKETT GROUP
Performance |
| Timeline |
| Japan Tobacco |
| HACKETT GROUP |
Japan Tobacco and HACKETT GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and HACKETT GROUP
The main advantage of trading using opposite Japan Tobacco and HACKETT GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, HACKETT GROUP 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 HACKETT GROUP will offset losses from the drop in HACKETT GROUP's long position.| Japan Tobacco vs. Philip Morris International | Japan Tobacco vs. Philip Morris International | Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. British American Tobacco |
| HACKETT GROUP vs. PICKN PAY STORES | HACKETT GROUP vs. Caseys General Stores | HACKETT GROUP vs. DISTRICT METALS | HACKETT GROUP vs. BJs Wholesale Club |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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