Correlation Between JAPAN TOBACCO and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on JAPAN TOBACCO and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and BANK HANDLOWY.
Diversification Opportunities for JAPAN TOBACCO and BANK HANDLOWY
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between JAPAN and BANK is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and BANK HANDLOWY
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 3.68 times more return on investment than BANK HANDLOWY. However, JAPAN TOBACCO is 3.68 times more volatile than BANK HANDLOWY. It trades about 0.17 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about -0.35 per unit of risk. If you would invest 1,210 in JAPAN TOBACCO UNSPADR12 on September 2, 2024 and sell it today you would earn a total of 70.00 from holding JAPAN TOBACCO UNSPADR12 or generate 5.79% 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. BANK HANDLOWY
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| BANK HANDLOWY |
JAPAN TOBACCO and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and BANK HANDLOWY
The main advantage of trading using opposite JAPAN TOBACCO and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| JAPAN TOBACCO vs. Molson Coors Beverage | JAPAN TOBACCO vs. INTERSHOP Communications Aktiengesellschaft | JAPAN TOBACCO vs. Monster Beverage Corp | JAPAN TOBACCO vs. Hemisphere Energy Corp |
| BANK HANDLOWY vs. Flutter Entertainment PLC | BANK HANDLOWY vs. Live Nation Entertainment | BANK HANDLOWY vs. PLAYSTUDIOS A DL 0001 | BANK HANDLOWY vs. Gladstone Investment |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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