Correlation Between Japan Tobacco and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and DFS Furniture 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 DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and DFS Furniture PLC, you can compare the effects of market volatilities on Japan Tobacco and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and DFS Furniture.
Diversification Opportunities for Japan Tobacco and DFS Furniture
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and DFS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and DFS Furniture go up and down completely randomly.
Pair Corralation between Japan Tobacco and DFS Furniture
Assuming the 90 days horizon Japan Tobacco is expected to under-perform the DFS Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Japan Tobacco is 1.92 times less risky than DFS Furniture. The stock trades about -0.19 of its potential returns per unit of risk. The DFS Furniture PLC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 162.00 in DFS Furniture PLC on October 30, 2024 and sell it today you would lose (7.00) from holding DFS Furniture PLC or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. DFS Furniture PLC
Performance |
| Timeline |
| Japan Tobacco |
| DFS Furniture PLC |
Japan Tobacco and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and DFS Furniture
The main advantage of trading using opposite Japan Tobacco and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Japan Tobacco vs. NEWELL RUBBERMAID | Japan Tobacco vs. Planet Fitness | Japan Tobacco vs. SANOK RUBBER ZY | Japan Tobacco vs. GOODYEAR T RUBBER |
| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |