Correlation Between SPORTING and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both SPORTING 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 SPORTING and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORTING and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on SPORTING 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 SPORTING with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and JAPAN TOBACCO.
Diversification Opportunities for SPORTING and JAPAN TOBACCO
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPORTING and JAPAN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING 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 SPORTING 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 SPORTING 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 SPORTING i.e., SPORTING and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between SPORTING and JAPAN TOBACCO
Assuming the 90 days trading horizon SPORTING is expected to generate 0.88 times more return on investment than JAPAN TOBACCO. However, SPORTING is 1.14 times less risky than JAPAN TOBACCO. It trades about 0.13 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.01 per unit of risk. If you would invest 98.00 in SPORTING on September 12, 2024 and sell it today you would earn a total of 10.00 from holding SPORTING or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
SPORTING vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| SPORTING |
| JAPAN TOBACCO UNSPADR12 |
SPORTING and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORTING and JAPAN TOBACCO
The main advantage of trading using opposite SPORTING and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORTING 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.The idea behind SPORTING and JAPAN TOBACCO UNSPADR12 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| JAPAN TOBACCO vs. MCEWEN MINING INC | JAPAN TOBACCO vs. GALENA MINING LTD | JAPAN TOBACCO vs. GRIFFIN MINING LTD | JAPAN TOBACCO vs. Calibre Mining 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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