Correlation Between Lion One and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both Lion One and JAPAN TOBACCO 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 Lion One and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Lion One and JAPAN TOBACCO 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 Lion One with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and JAPAN TOBACCO.
Diversification Opportunities for Lion One and JAPAN TOBACCO
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and JAPAN is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and Lion One 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 Lion One Metals are associated (or correlated) with JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Lion One i.e., Lion One and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between Lion One and JAPAN TOBACCO
Assuming the 90 days horizon Lion One Metals is expected to under-perform the JAPAN TOBACCO. In addition to that, Lion One is 1.82 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about -0.19 of its total potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.05 per unit of volatility. If you would invest 1,220 in JAPAN TOBACCO UNSPADR12 on August 28, 2024 and sell it today you would earn a total of 20.00 from holding JAPAN TOBACCO UNSPADR12 or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lion One Metals vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| Lion One Metals |
| JAPAN TOBACCO UNSPADR12 |
Lion One and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and JAPAN TOBACCO
The main advantage of trading using opposite Lion One and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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