Correlation Between JAPAN TOBACCO and WFD Unibail
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and WFD Unibail 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 WFD Unibail 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 WFD Unibail Rodamco, you can compare the effects of market volatilities on JAPAN TOBACCO and WFD Unibail 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 WFD Unibail. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and WFD Unibail.
Diversification Opportunities for JAPAN TOBACCO and WFD Unibail
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and WFD is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and WFD Unibail Rodamco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WFD Unibail Rodamco 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 WFD Unibail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WFD Unibail Rodamco has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and WFD Unibail go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and WFD Unibail
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 1.18 times less return on investment than WFD Unibail. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.18 times less risky than WFD Unibail. It trades about 0.06 of its potential returns per unit of risk. WFD Unibail Rodamco is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,737 in WFD Unibail Rodamco on September 13, 2024 and sell it today you would earn a total of 2,651 from holding WFD Unibail Rodamco or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. WFD Unibail Rodamco
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| WFD Unibail Rodamco |
JAPAN TOBACCO and WFD Unibail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and WFD Unibail
The main advantage of trading using opposite JAPAN TOBACCO and WFD Unibail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, WFD Unibail 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 WFD Unibail will offset losses from the drop in WFD Unibail's long position.| JAPAN TOBACCO vs. MCEWEN MINING INC | JAPAN TOBACCO vs. GALENA MINING LTD | JAPAN TOBACCO vs. GRIFFIN MINING LTD | JAPAN TOBACCO vs. Calibre Mining Corp |
| WFD Unibail vs. Bausch Health Companies | WFD Unibail vs. FEMALE HEALTH | WFD Unibail vs. Ramsay Health Care | WFD Unibail vs. JAPAN TOBACCO UNSPADR12 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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