Correlation Between JAPAN TOBACCO and Boston Beer
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Boston Beer 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 Boston Beer 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 The Boston Beer, you can compare the effects of market volatilities on JAPAN TOBACCO and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Boston Beer.
Diversification Opportunities for JAPAN TOBACCO and Boston Beer
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JAPAN and Boston is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Boston Beer go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Boston Beer
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.68 times more return on investment than Boston Beer. However, JAPAN TOBACCO UNSPADR12 is 1.47 times less risky than Boston Beer. It trades about -0.07 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.4 per unit of risk. If you would invest 1,200 in JAPAN TOBACCO UNSPADR12 on November 5, 2024 and sell it today you would lose (20.00) from holding JAPAN TOBACCO UNSPADR12 or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. The Boston Beer
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Boston Beer |
JAPAN TOBACCO and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Boston Beer
The main advantage of trading using opposite JAPAN TOBACCO and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| JAPAN TOBACCO vs. Grupo Carso SAB | JAPAN TOBACCO vs. CARSALESCOM | JAPAN TOBACCO vs. REVO INSURANCE SPA | JAPAN TOBACCO vs. New China Life |
| Boston Beer vs. CHINA EDUCATION GROUP | Boston Beer vs. SBI Insurance Group | Boston Beer vs. Safety Insurance Group | Boston Beer vs. EMBARK EDUCATION LTD |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |