Correlation Between Japan Exchange and Moodys
Can any of the company-specific risk be diversified away by investing in both Japan Exchange and Moodys 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 Exchange and Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Exchange Group and Moodys, you can compare the effects of market volatilities on Japan Exchange and Moodys 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 Exchange with a short position of Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Exchange and Moodys.
Diversification Opportunities for Japan Exchange and Moodys
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and Moodys is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Japan Exchange Group and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and Japan Exchange 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 Exchange Group are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Japan Exchange i.e., Japan Exchange and Moodys go up and down completely randomly.
Pair Corralation between Japan Exchange and Moodys
Assuming the 90 days horizon Japan Exchange is expected to generate 1.04 times less return on investment than Moodys. In addition to that, Japan Exchange is 1.44 times more volatile than Moodys. It trades about 0.07 of its total potential returns per unit of risk. Moodys is currently generating about 0.11 per unit of volatility. If you would invest 32,153 in Moodys on September 12, 2024 and sell it today you would earn a total of 17,547 from holding Moodys or generate 54.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Japan Exchange Group vs. Moodys
Performance |
| Timeline |
| Japan Exchange Group |
| Moodys |
Japan Exchange and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Exchange and Moodys
The main advantage of trading using opposite Japan Exchange and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Exchange position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.| Japan Exchange vs. Moodys | Japan Exchange vs. MSCI Inc | Japan Exchange vs. Intercontinental Exchange | Japan Exchange vs. CME Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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