Correlation Between Tokyu REIT and Nissan
Can any of the company-specific risk be diversified away by investing in both Tokyu REIT and Nissan 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 Tokyu REIT and Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyu REIT and Nissan Motor Co, you can compare the effects of market volatilities on Tokyu REIT and Nissan 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 Tokyu REIT with a short position of Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyu REIT and Nissan.
Diversification Opportunities for Tokyu REIT and Nissan
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tokyu and Nissan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu REIT and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor and Tokyu REIT 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 Tokyu REIT are associated (or correlated) with Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of Tokyu REIT i.e., Tokyu REIT and Nissan go up and down completely randomly.
Pair Corralation between Tokyu REIT and Nissan
Assuming the 90 days horizon Tokyu REIT is expected to under-perform the Nissan. In addition to that, Tokyu REIT is 5.38 times more volatile than Nissan Motor Co. It trades about -0.13 of its total potential returns per unit of risk. Nissan Motor Co is currently generating about 0.01 per unit of volatility. If you would invest 314.00 in Nissan Motor Co on August 28, 2024 and sell it today you would lose (44.00) from holding Nissan Motor Co or give up 14.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.98% |
| Values | Daily Returns |
Tokyu REIT vs. Nissan Motor Co
Performance |
| Timeline |
| Tokyu REIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nissan Motor |
Tokyu REIT and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyu REIT and Nissan
The main advantage of trading using opposite Tokyu REIT and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu REIT position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan's long position.| Tokyu REIT vs. Smith Douglas Homes | Tokyu REIT vs. MI Homes | Tokyu REIT vs. Cumberland Pharmaceuticals | Tokyu REIT vs. Mills Music Trust |
| Nissan vs. Isuzu Motors | Nissan vs. Renault SA | Nissan vs. Toyota Motor Corp | Nissan vs. Porsche Automobile Holding |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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