Correlation Between Japan Tobacco and BROOKDALE
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and BROOKDALE 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 BROOKDALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and BROOKDALE SR LIVING, you can compare the effects of market volatilities on Japan Tobacco and BROOKDALE 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 BROOKDALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and BROOKDALE.
Diversification Opportunities for Japan Tobacco and BROOKDALE
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and BROOKDALE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and BROOKDALE SR LIVING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKDALE SR LIVING 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 BROOKDALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKDALE SR LIVING has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and BROOKDALE go up and down completely randomly.
Pair Corralation between Japan Tobacco and BROOKDALE
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.64 times more return on investment than BROOKDALE. However, Japan Tobacco is 1.55 times less risky than BROOKDALE. It trades about 0.14 of its potential returns per unit of risk. BROOKDALE SR LIVING is currently generating about 0.01 per unit of risk. If you would invest 2,509 in Japan Tobacco on September 14, 2024 and sell it today you would earn a total of 91.00 from holding Japan Tobacco or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. BROOKDALE SR LIVING
Performance |
| Timeline |
| Japan Tobacco |
| BROOKDALE SR LIVING |
Japan Tobacco and BROOKDALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and BROOKDALE
The main advantage of trading using opposite Japan Tobacco and BROOKDALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, BROOKDALE 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 BROOKDALE will offset losses from the drop in BROOKDALE'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 |
| BROOKDALE vs. Japan Tobacco | BROOKDALE vs. ATRYS HEALTH SA | BROOKDALE vs. Bausch Health Companies | BROOKDALE vs. Lendlease Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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