Correlation Between Yokohama Rubber and British American
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and British American 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 Yokohama Rubber and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and British American Tobacco, you can compare the effects of market volatilities on Yokohama Rubber and British American 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 Yokohama Rubber with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and British American.
Diversification Opportunities for Yokohama Rubber and British American
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yokohama and British is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and British American go up and down completely randomly.
Pair Corralation between Yokohama Rubber and British American
Assuming the 90 days trading horizon Yokohama Rubber is expected to generate 15.65 times less return on investment than British American. In addition to that, Yokohama Rubber is 1.48 times more volatile than British American Tobacco. It trades about 0.0 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.07 per unit of volatility. If you would invest 2,648 in British American Tobacco on August 26, 2024 and sell it today you would earn a total of 872.00 from holding British American Tobacco or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. British American Tobacco
Performance |
| Timeline |
| Yokohama Rubber |
| British American Tobacco |
Yokohama Rubber and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and British American
The main advantage of trading using opposite Yokohama Rubber and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Yokohama Rubber vs. AOYAMA TRADING | Yokohama Rubber vs. SLR Investment Corp | Yokohama Rubber vs. Chuangs China Investments | Yokohama Rubber vs. NAKED WINES PLC |
| British American vs. The Yokohama Rubber | British American vs. Magnachip Semiconductor | British American vs. Goodyear Tire Rubber | British American vs. GOODYEAR T RUBBER |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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