Correlation Between JAPAN TOBACCO and Walker Dunlop
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Walker Dunlop 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 Walker Dunlop 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 Walker Dunlop, you can compare the effects of market volatilities on JAPAN TOBACCO and Walker Dunlop 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 Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Walker Dunlop.
Diversification Opportunities for JAPAN TOBACCO and Walker Dunlop
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JAPAN and Walker is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop 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 Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Walker Dunlop go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Walker Dunlop
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.78 times more return on investment than Walker Dunlop. However, JAPAN TOBACCO UNSPADR12 is 1.29 times less risky than Walker Dunlop. It trades about -0.2 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.42 per unit of risk. If you would invest 1,240 in JAPAN TOBACCO UNSPADR12 on October 17, 2024 and sell it today you would lose (70.00) from holding JAPAN TOBACCO UNSPADR12 or give up 5.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Walker Dunlop
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Walker Dunlop |
JAPAN TOBACCO and Walker Dunlop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Walker Dunlop
The main advantage of trading using opposite JAPAN TOBACCO and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Walker Dunlop 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 Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.| JAPAN TOBACCO vs. QUEEN S ROAD | JAPAN TOBACCO vs. Broadridge Financial Solutions | JAPAN TOBACCO vs. Lendlease Group | JAPAN TOBACCO vs. TRAINLINE PLC LS |
| Walker Dunlop vs. JAPAN TOBACCO UNSPADR12 | Walker Dunlop vs. INTERSHOP Communications Aktiengesellschaft | Walker Dunlop vs. ecotel communication ag | Walker Dunlop vs. Entravision Communications |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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