Correlation Between Nishi Nippon and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Nishi Nippon and IMPERIAL 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 Nishi Nippon and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nishi Nippon Railroad Co and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Nishi Nippon and IMPERIAL 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 Nishi Nippon with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishi Nippon and IMPERIAL TOBACCO.
Diversification Opportunities for Nishi Nippon and IMPERIAL TOBACCO
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nishi and IMPERIAL is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nishi Nippon Railroad Co and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Nishi Nippon 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 Nishi Nippon Railroad Co are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Nishi Nippon i.e., Nishi Nippon and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Nishi Nippon and IMPERIAL TOBACCO
Assuming the 90 days horizon Nishi Nippon Railroad Co is expected to generate 1.41 times more return on investment than IMPERIAL TOBACCO. However, Nishi Nippon is 1.41 times more volatile than IMPERIAL TOBACCO . It trades about 0.3 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.31 per unit of risk. If you would invest 1,300 in Nishi Nippon Railroad Co on August 24, 2024 and sell it today you would earn a total of 150.00 from holding Nishi Nippon Railroad Co or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nishi Nippon Railroad Co vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Nishi Nippon Railroad |
| IMPERIAL TOBACCO |
Nishi Nippon and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nishi Nippon and IMPERIAL TOBACCO
The main advantage of trading using opposite Nishi Nippon and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nishi Nippon position performs unexpectedly, IMPERIAL 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon vs. Origin Agritech | Nishi Nippon vs. SIVERS SEMICONDUCTORS AB | Nishi Nippon vs. Talanx AG |
| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |