Correlation Between Nintendo and Capcom Co
Can any of the company-specific risk be diversified away by investing in both Nintendo and Capcom Co 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 Nintendo and Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co and Capcom Co, you can compare the effects of market volatilities on Nintendo and Capcom Co 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 Nintendo with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and Capcom Co.
Diversification Opportunities for Nintendo and Capcom Co
Very weak diversification
The 3 months correlation between Nintendo and Capcom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co and Capcom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co and Nintendo 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 Nintendo Co are associated (or correlated) with Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of Nintendo i.e., Nintendo and Capcom Co go up and down completely randomly.
Pair Corralation between Nintendo and Capcom Co
Assuming the 90 days horizon Nintendo Co is expected to generate 1.27 times more return on investment than Capcom Co. However, Nintendo is 1.27 times more volatile than Capcom Co. It trades about 0.08 of its potential returns per unit of risk. Capcom Co is currently generating about -0.02 per unit of risk. If you would invest 5,320 in Nintendo Co on October 22, 2024 and sell it today you would earn a total of 573.00 from holding Nintendo Co or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Nintendo Co vs. Capcom Co
Performance |
| Timeline |
| Nintendo |
| Capcom Co |
Nintendo and Capcom Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nintendo and Capcom Co
The main advantage of trading using opposite Nintendo and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo position performs unexpectedly, Capcom Co 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 Capcom Co will offset losses from the drop in Capcom Co's long position.| Nintendo vs. Take Two Interactive Software | Nintendo vs. Electronic Arts | Nintendo vs. UbiSoft Entertainment | Nintendo vs. Square Enix Holdings |
| Capcom Co vs. Square Enix Holdings | Capcom Co vs. CD Projekt SA | Capcom Co vs. Sega Sammy Holdings | Capcom Co vs. Square Enix 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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