Correlation Between JAPAN TOBACCO and Sienna Senior
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Sienna Senior 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 Sienna Senior 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 Sienna Senior Living, you can compare the effects of market volatilities on JAPAN TOBACCO and Sienna Senior 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 Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Sienna Senior.
Diversification Opportunities for JAPAN TOBACCO and Sienna Senior
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JAPAN and Sienna is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living 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 Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Sienna Senior go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Sienna Senior
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to under-perform the Sienna Senior. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN TOBACCO UNSPADR12 is 2.0 times less risky than Sienna Senior. The stock trades about -0.22 of its potential returns per unit of risk. The Sienna Senior Living is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,094 in Sienna Senior Living on October 28, 2024 and sell it today you would lose (119.00) from holding Sienna Senior Living or give up 10.88% 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. Sienna Senior Living
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Sienna Senior Living |
JAPAN TOBACCO and Sienna Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Sienna Senior
The main advantage of trading using opposite JAPAN TOBACCO and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Sienna Senior 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 Sienna Senior will offset losses from the drop in Sienna Senior's long position.| JAPAN TOBACCO vs. GREENX METALS LTD | JAPAN TOBACCO vs. Constellation Software | JAPAN TOBACCO vs. Beta Systems Software | JAPAN TOBACCO vs. SIERRA METALS |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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