Correlation Between JAPAN TOBACCO and Amazon
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on JAPAN TOBACCO and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Amazon.
Diversification Opportunities for JAPAN TOBACCO and Amazon
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between JAPAN and Amazon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Amazon go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Amazon
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 6.41 times less return on investment than Amazon. In addition to that, JAPAN TOBACCO is 1.0 times more volatile than Amazon Inc. It trades about 0.02 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 14,176 in Amazon Inc on October 18, 2024 and sell it today you would earn a total of 6,909 from holding Amazon Inc or generate 48.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Amazon Inc
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Amazon Inc |
JAPAN TOBACCO and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Amazon
The main advantage of trading using opposite JAPAN TOBACCO and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| JAPAN TOBACCO vs. FIRST SHIP LEASE | JAPAN TOBACCO vs. BioNTech SE | JAPAN TOBACCO vs. LOANDEPOT INC A | JAPAN TOBACCO vs. Agilent Technologies |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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