Correlation Between JAPAN TOBACCO and SLR Investment
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on JAPAN TOBACCO and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and SLR Investment.
Diversification Opportunities for JAPAN TOBACCO and SLR Investment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between JAPAN and SLR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and SLR Investment go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and SLR Investment
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 2.21 times less return on investment than SLR Investment. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.24 times less risky than SLR Investment. It trades about 0.15 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,404 in SLR Investment Corp on September 1, 2024 and sell it today you would earn a total of 161.00 from holding SLR Investment Corp or generate 11.47% 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. SLR Investment Corp
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| SLR Investment Corp |
JAPAN TOBACCO and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and SLR Investment
The main advantage of trading using opposite JAPAN TOBACCO and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| JAPAN TOBACCO vs. YATRA ONLINE DL 0001 | JAPAN TOBACCO vs. Austevoll Seafood ASA | JAPAN TOBACCO vs. NIPPON MEAT PACKERS | JAPAN TOBACCO vs. Tyson Foods |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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