Correlation Between Japan Post and Legal General
Can any of the company-specific risk be diversified away by investing in both Japan Post and Legal General 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 Post and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Holdings and Legal General Group, you can compare the effects of market volatilities on Japan Post and Legal General 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 Post with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Legal General.
Diversification Opportunities for Japan Post and Legal General
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Japan and Legal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group and Japan Post 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 Post Holdings are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Japan Post i.e., Japan Post and Legal General go up and down completely randomly.
Pair Corralation between Japan Post and Legal General
Assuming the 90 days horizon Japan Post Holdings is expected to under-perform the Legal General. In addition to that, Japan Post is 46.37 times more volatile than Legal General Group. It trades about -0.12 of its total potential returns per unit of risk. Legal General Group is currently generating about 0.02 per unit of volatility. If you would invest 1,313 in Legal General Group on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Legal General Group or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 35.56% |
| Values | Daily Returns |
Japan Post Holdings vs. Legal General Group
Performance |
| Timeline |
| Japan Post Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Legal General Group |
Japan Post and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Legal General
The main advantage of trading using opposite Japan Post and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Japan Post vs. Huntington Bancshares Incorporated | Japan Post vs. Fifth Third Bancorp | Japan Post vs. MT Bank | Japan Post vs. Citizens Financial Group, |
| Legal General vs. Blackstone Group | Legal General vs. BlackRock | Legal General vs. Apollo Global Management | Legal General vs. Bank of New |
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 CEOs Directory module to screen CEOs from public companies around the world.
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