Correlation Between PENN NATL and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both PENN NATL 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 PENN NATL and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and Japan Tobacco, you can compare the effects of market volatilities on PENN NATL 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 PENN NATL with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Japan Tobacco.
Diversification Opportunities for PENN NATL and Japan Tobacco
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PENN and Japan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and PENN NATL 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 PENN NATL GAMING 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 has no effect on the direction of PENN NATL i.e., PENN NATL and Japan Tobacco go up and down completely randomly.
Pair Corralation between PENN NATL and Japan Tobacco
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.53 times more return on investment than Japan Tobacco. However, PENN NATL is 1.53 times more volatile than Japan Tobacco. It trades about 0.1 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.08 per unit of risk. If you would invest 1,893 in PENN NATL GAMING on September 1, 2024 and sell it today you would earn a total of 90.00 from holding PENN NATL GAMING or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. Japan Tobacco
Performance |
| Timeline |
| PENN NATL GAMING |
| Japan Tobacco |
PENN NATL and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Japan Tobacco
The main advantage of trading using opposite PENN NATL and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL 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.| PENN NATL vs. SIVERS SEMICONDUCTORS AB | PENN NATL vs. Darden Restaurants | PENN NATL vs. Reliance Steel Aluminum | PENN NATL vs. Q2M Managementberatung AG |
| Japan Tobacco vs. Performance Food Group | Japan Tobacco vs. JJ SNACK FOODS | Japan Tobacco vs. MUTUIONLINE | Japan Tobacco vs. LIFEWAY FOODS |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |