Correlation Between Takeda Pharmaceutical and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both Takeda Pharmaceutical and Aflac Incorporated 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 Takeda Pharmaceutical and Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Takeda Pharmaceutical and Aflac Incorporated, you can compare the effects of market volatilities on Takeda Pharmaceutical and Aflac Incorporated 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 Takeda Pharmaceutical with a short position of Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Aflac Incorporated.
Diversification Opportunities for Takeda Pharmaceutical and Aflac Incorporated
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Takeda and Aflac is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated and Takeda Pharmaceutical 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 Takeda Pharmaceutical are associated (or correlated) with Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Aflac Incorporated go up and down completely randomly.
Pair Corralation between Takeda Pharmaceutical and Aflac Incorporated
Assuming the 90 days trading horizon Takeda Pharmaceutical is expected to under-perform the Aflac Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical is 1.14 times less risky than Aflac Incorporated. The stock trades about -0.05 of its potential returns per unit of risk. The Aflac Incorporated is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9,938 in Aflac Incorporated on September 2, 2024 and sell it today you would earn a total of 857.00 from holding Aflac Incorporated or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Takeda Pharmaceutical vs. Aflac Incorporated
Performance |
| Timeline |
| Takeda Pharmaceutical |
| Aflac Incorporated |
Takeda Pharmaceutical and Aflac Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Takeda Pharmaceutical and Aflac Incorporated
The main advantage of trading using opposite Takeda Pharmaceutical and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Takeda Pharmaceutical position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.| Takeda Pharmaceutical vs. Apple Inc | Takeda Pharmaceutical vs. Apple Inc | Takeda Pharmaceutical vs. Apple Inc | Takeda Pharmaceutical vs. Apple Inc |
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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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