Correlation Between Japan Tobacco and EMPLOYERS HLDGS
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and EMPLOYERS HLDGS DL, you can compare the effects of market volatilities on Japan Tobacco and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and EMPLOYERS HLDGS.
Diversification Opportunities for Japan Tobacco and EMPLOYERS HLDGS
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and EMPLOYERS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and EMPLOYERS HLDGS DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPLOYERS HLDGS DL 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 EMPLOYERS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPLOYERS HLDGS DL has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and EMPLOYERS HLDGS go up and down completely randomly.
Pair Corralation between Japan Tobacco and EMPLOYERS HLDGS
Assuming the 90 days horizon Japan Tobacco is expected to generate 1.1 times more return on investment than EMPLOYERS HLDGS. However, Japan Tobacco is 1.1 times more volatile than EMPLOYERS HLDGS DL. It trades about 0.04 of its potential returns per unit of risk. EMPLOYERS HLDGS DL is currently generating about 0.04 per unit of risk. If you would invest 1,896 in Japan Tobacco on October 31, 2024 and sell it today you would earn a total of 544.00 from holding Japan Tobacco or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.81% |
| Values | Daily Returns |
Japan Tobacco vs. EMPLOYERS HLDGS DL
Performance |
| Timeline |
| Japan Tobacco |
| EMPLOYERS HLDGS DL |
Japan Tobacco and EMPLOYERS HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and EMPLOYERS HLDGS
The main advantage of trading using opposite Japan Tobacco and EMPLOYERS HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, EMPLOYERS HLDGS 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 EMPLOYERS HLDGS will offset losses from the drop in EMPLOYERS HLDGS's long position.| Japan Tobacco vs. SANOK RUBBER ZY | Japan Tobacco vs. SAN MIGUEL BREWERY | Japan Tobacco vs. The Boston Beer | Japan Tobacco vs. CARSALESCOM |
| EMPLOYERS HLDGS vs. DETALION GAMES SA | EMPLOYERS HLDGS vs. CONTAGIOUS GAMING INC | EMPLOYERS HLDGS vs. Tsingtao Brewery | EMPLOYERS HLDGS vs. Fevertree Drinks PLC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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