Correlation Between Southwest Gas and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both Southwest Gas and Tokyo Electron 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 Southwest Gas and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and Tokyo Electron, you can compare the effects of market volatilities on Southwest Gas and Tokyo Electron 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 Southwest Gas with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and Tokyo Electron.
Diversification Opportunities for Southwest Gas and Tokyo Electron
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Tokyo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and Southwest Gas 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 Southwest Gas Holdings are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Southwest Gas i.e., Southwest Gas and Tokyo Electron go up and down completely randomly.
Pair Corralation between Southwest Gas and Tokyo Electron
Considering the 90-day investment horizon Southwest Gas Holdings is expected to under-perform the Tokyo Electron. But the stock apears to be less risky and, when comparing its historical volatility, Southwest Gas Holdings is 2.81 times less risky than Tokyo Electron. The stock trades about -0.07 of its potential returns per unit of risk. The Tokyo Electron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,720 in Tokyo Electron on September 12, 2024 and sell it today you would earn a total of 911.00 from holding Tokyo Electron or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Gas Holdings vs. Tokyo Electron
Performance |
| Timeline |
| Southwest Gas Holdings |
| Tokyo Electron |
Southwest Gas and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and Tokyo Electron
The main advantage of trading using opposite Southwest Gas and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
| Tokyo Electron vs. Asm Pacific Technology | Tokyo Electron vs. Lasertec | Tokyo Electron vs. Sumco Corp ADR | Tokyo Electron vs. AIXTRON SE |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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