Correlation Between Caltagirone SpA and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA 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 Caltagirone SpA and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Caltagirone SpA 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 Caltagirone SpA with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and JAPAN TOBACCO.
Diversification Opportunities for Caltagirone SpA and JAPAN TOBACCO
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caltagirone and JAPAN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and Caltagirone SpA 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 Caltagirone SpA 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 UNSPADR12 has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between Caltagirone SpA and JAPAN TOBACCO
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.3 times more return on investment than JAPAN TOBACCO. However, Caltagirone SpA is 1.3 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.08 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.07 per unit of risk. If you would invest 361.00 in Caltagirone SpA on August 29, 2024 and sell it today you would earn a total of 237.00 from holding Caltagirone SpA or generate 65.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caltagirone SpA vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| Caltagirone SpA |
| JAPAN TOBACCO UNSPADR12 |
Caltagirone SpA and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and JAPAN TOBACCO
The main advantage of trading using opposite Caltagirone SpA and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA 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.| Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc |
| JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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