Correlation Between JAPAN TOBACCO and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and PREMIER FOODS 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 PREMIER FOODS 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 PREMIER FOODS, you can compare the effects of market volatilities on JAPAN TOBACCO and PREMIER FOODS 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and PREMIER FOODS.
Diversification Opportunities for JAPAN TOBACCO and PREMIER FOODS
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and PREMIER is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and PREMIER FOODS go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and PREMIER FOODS
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 1.07 times more return on investment than PREMIER FOODS. However, JAPAN TOBACCO is 1.07 times more volatile than PREMIER FOODS. It trades about 0.06 of its potential returns per unit of risk. PREMIER FOODS is currently generating about -0.07 per unit of risk. If you would invest 1,210 in JAPAN TOBACCO UNSPADR12 on August 24, 2024 and sell it today you would earn a total of 20.00 from holding JAPAN TOBACCO UNSPADR12 or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. PREMIER FOODS
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| PREMIER FOODS |
JAPAN TOBACCO and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and PREMIER FOODS
The main advantage of trading using opposite JAPAN TOBACCO and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| JAPAN TOBACCO vs. AOYAMA TRADING | JAPAN TOBACCO vs. Apollo Investment Corp | JAPAN TOBACCO vs. EAT WELL INVESTMENT | JAPAN TOBACCO vs. Postal Savings Bank |
| PREMIER FOODS vs. Sumitomo Rubber Industries | PREMIER FOODS vs. Nufarm Limited | PREMIER FOODS vs. EAGLE MATERIALS | PREMIER FOODS vs. JAPAN TOBACCO UNSPADR12 |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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