Correlation Between Square Enix and Nintendo
Can any of the company-specific risk be diversified away by investing in both Square Enix and Nintendo 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 Square Enix and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Square Enix Holdings and Nintendo Co ADR, you can compare the effects of market volatilities on Square Enix and Nintendo 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 Square Enix with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Square Enix and Nintendo.
Diversification Opportunities for Square Enix and Nintendo
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Square and Nintendo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Square Enix Holdings and Nintendo Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo Co ADR and Square Enix 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 Square Enix Holdings are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo Co ADR has no effect on the direction of Square Enix i.e., Square Enix and Nintendo go up and down completely randomly.
Pair Corralation between Square Enix and Nintendo
Assuming the 90 days horizon Square Enix Holdings is expected to generate 2.62 times more return on investment than Nintendo. However, Square Enix is 2.62 times more volatile than Nintendo Co ADR. It trades about 0.05 of its potential returns per unit of risk. Nintendo Co ADR is currently generating about 0.0 per unit of risk. If you would invest 3,821 in Square Enix Holdings on August 26, 2024 and sell it today you would earn a total of 229.00 from holding Square Enix Holdings or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Square Enix Holdings vs. Nintendo Co ADR
Performance |
| Timeline |
| Square Enix Holdings |
| Nintendo Co ADR |
Square Enix and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Square Enix and Nintendo
The main advantage of trading using opposite Square Enix and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Square Enix position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Square Enix vs. CD Projekt SA | Square Enix vs. Sega Sammy Holdings | Square Enix vs. Capcom Co Ltd | Square Enix vs. Embracer Group AB |
| Nintendo vs. Square Enix Holdings | Nintendo vs. Capcom Co Ltd | Nintendo vs. Electronic Arts | Nintendo vs. Roblox 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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