Correlation Between Lixil Group and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Lixil Group and Johnson Controls 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 Lixil Group and Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lixil Group Corp and Johnson Controls International, you can compare the effects of market volatilities on Lixil Group and Johnson Controls 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 Lixil Group with a short position of Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixil Group and Johnson Controls.
Diversification Opportunities for Lixil Group and Johnson Controls
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lixil and Johnson is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lixil Group Corp and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int and Lixil Group 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 Lixil Group Corp are associated (or correlated) with Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Lixil Group i.e., Lixil Group and Johnson Controls go up and down completely randomly.
Pair Corralation between Lixil Group and Johnson Controls
Assuming the 90 days horizon Lixil Group Corp is expected to under-perform the Johnson Controls. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lixil Group Corp is 1.2 times less risky than Johnson Controls. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Johnson Controls International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,249 in Johnson Controls International on August 30, 2024 and sell it today you would earn a total of 1,122 from holding Johnson Controls International or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lixil Group Corp vs. Johnson Controls International
Performance |
| Timeline |
| Lixil Group Corp |
| Johnson Controls Int |
Lixil Group and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lixil Group and Johnson Controls
The main advantage of trading using opposite Lixil Group and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixil Group position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |