Correlation Between Nippon Steel and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Nippon Steel and ITALIAN WINE 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 Nippon Steel and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Nippon Steel and ITALIAN WINE 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 Nippon Steel with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and ITALIAN WINE.
Diversification Opportunities for Nippon Steel and ITALIAN WINE
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and ITALIAN is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and Nippon Steel 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 Nippon Steel are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Nippon Steel i.e., Nippon Steel and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Nippon Steel and ITALIAN WINE
Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.57 times more return on investment than ITALIAN WINE. However, Nippon Steel is 1.75 times less risky than ITALIAN WINE. It trades about 0.13 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.01 per unit of risk. If you would invest 1,813 in Nippon Steel on October 21, 2024 and sell it today you would earn a total of 82.00 from holding Nippon Steel or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Nippon Steel |
| ITALIAN WINE BRANDS |
Nippon Steel and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and ITALIAN WINE
The main advantage of trading using opposite Nippon Steel and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Nippon Steel vs. ARISTOCRAT LEISURE | Nippon Steel vs. USWE SPORTS AB | Nippon Steel vs. BRIT AMER TOBACCO | Nippon Steel vs. LG Display Co |
| ITALIAN WINE vs. THAI BEVERAGE | ITALIAN WINE vs. SANOK RUBBER ZY | ITALIAN WINE vs. SAN MIGUEL BREWERY | ITALIAN WINE vs. Compagnie Plastic Omnium |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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