Correlation Between JAPAN TOBACCO and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Virtu Financial 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 Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and Virtu Financial, you can compare the effects of market volatilities on JAPAN TOBACCO and Virtu Financial 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 Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Virtu Financial.
Diversification Opportunities for JAPAN TOBACCO and Virtu Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between JAPAN and Virtu is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial 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 UNSPADR12 are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Virtu Financial go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Virtu Financial
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 2.89 times less return on investment than Virtu Financial. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.5 times less risky than Virtu Financial. It trades about 0.07 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,520 in Virtu Financial on November 1, 2024 and sell it today you would earn a total of 180.00 from holding Virtu Financial or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Virtu Financial
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Virtu Financial |
JAPAN TOBACCO and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Virtu Financial
The main advantage of trading using opposite JAPAN TOBACCO and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.| JAPAN TOBACCO vs. Vishay Intertechnology | JAPAN TOBACCO vs. Wayside Technology Group | JAPAN TOBACCO vs. ARDAGH METAL PACDL 0001 | JAPAN TOBACCO vs. GALENA MINING LTD |
| Virtu Financial vs. Methode Electronics | Virtu Financial vs. Renesas Electronics | Virtu Financial vs. AOI Electronics Co | Virtu Financial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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