Correlation Between JAPAN TOBACCO and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Cohen Steers 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 Cohen Steers 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 Cohen Steers, you can compare the effects of market volatilities on JAPAN TOBACCO and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Cohen Steers.
Diversification Opportunities for JAPAN TOBACCO and Cohen Steers
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and Cohen is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Cohen Steers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Cohen Steers go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Cohen Steers
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 1.47 times less return on investment than Cohen Steers. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.15 times less risky than Cohen Steers. It trades about 0.06 of its potential returns per unit of risk. Cohen Steers is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,549 in Cohen Steers on September 12, 2024 and sell it today you would earn a total of 3,651 from holding Cohen Steers or generate 65.8% 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. Cohen Steers
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Cohen Steers |
JAPAN TOBACCO and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Cohen Steers
The main advantage of trading using opposite JAPAN TOBACCO and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Japan Tobacco |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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