Correlation Between NYSE Composite and Hitachi
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Hitachi 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 NYSE Composite and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Hitachi Ltd ADR, you can compare the effects of market volatilities on NYSE Composite and Hitachi 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 NYSE Composite with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Hitachi.
Diversification Opportunities for NYSE Composite and Hitachi
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Hitachi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Hitachi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Ltd ADR and NYSE Composite 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 NYSE Composite are associated (or correlated) with Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Ltd ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and Hitachi go up and down completely randomly.
Pair Corralation between NYSE Composite and Hitachi
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than Hitachi. However, NYSE Composite is 3.58 times less risky than Hitachi. It trades about 0.43 of its potential returns per unit of risk. Hitachi Ltd ADR is currently generating about 0.07 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 102,865 from holding NYSE Composite or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Hitachi Ltd ADR
Performance |
| Timeline |
NYSE Composite and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Hitachi Ltd ADR
Pair trading matchups for Hitachi
Pair Trading with NYSE Composite and Hitachi
The main advantage of trading using opposite NYSE Composite and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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