Correlation Between Old Republic and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Japan Tobacco ADR, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Japan Tobacco.
Diversification Opportunities for Old Republic and Japan Tobacco
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Japan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Japan Tobacco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco ADR and Old Republic 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 Old Republic International 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 ADR has no effect on the direction of Old Republic i.e., Old Republic and Japan Tobacco go up and down completely randomly.
Pair Corralation between Old Republic and Japan Tobacco
Considering the 90-day investment horizon Old Republic International is expected to generate 1.0 times more return on investment than Japan Tobacco. However, Old Republic International is 1.0 times less risky than Japan Tobacco. It trades about 0.37 of its potential returns per unit of risk. Japan Tobacco ADR is currently generating about 0.07 per unit of risk. If you would invest 3,530 in Old Republic International on August 28, 2024 and sell it today you would earn a total of 350.00 from holding Old Republic International or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Old Republic International vs. Japan Tobacco ADR
Performance |
| Timeline |
| Old Republic Interna |
| Japan Tobacco ADR |
Old Republic and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Japan Tobacco
The main advantage of trading using opposite Old Republic and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Turning Point Brands |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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