Correlation Between Japan Tobacco and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Clean Energy 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 Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Clean Energy Fuels, you can compare the effects of market volatilities on Japan Tobacco and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Clean Energy.
Diversification Opportunities for Japan Tobacco and Clean Energy
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and Clean is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Clean Energy go up and down completely randomly.
Pair Corralation between Japan Tobacco and Clean Energy
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.35 times more return on investment than Clean Energy. However, Japan Tobacco is 2.88 times less risky than Clean Energy. It trades about 0.07 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.0 per unit of risk. If you would invest 2,566 in Japan Tobacco on August 30, 2024 and sell it today you would earn a total of 54.00 from holding Japan Tobacco or generate 2.1% 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. Clean Energy Fuels
Performance |
| Timeline |
| Japan Tobacco |
| Clean Energy Fuels |
Japan Tobacco and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Clean Energy
The main advantage of trading using opposite Japan Tobacco and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. JAPAN TOBACCO UNSPADR12 | Japan Tobacco vs. Superior Plus Corp | Japan Tobacco vs. NMI Holdings |
| Clean Energy vs. Neste Oyj | Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |