Correlation Between SLR Investment and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both SLR Investment and JAPAN TOBACCO 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 SLR Investment and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on SLR Investment and JAPAN TOBACCO 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 SLR Investment with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and JAPAN TOBACCO.
Diversification Opportunities for SLR Investment and JAPAN TOBACCO
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SLR and JAPAN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and SLR Investment 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 SLR Investment Corp are associated (or correlated) with JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of SLR Investment i.e., SLR Investment and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between SLR Investment and JAPAN TOBACCO
Assuming the 90 days horizon SLR Investment is expected to generate 1.09 times less return on investment than JAPAN TOBACCO. But when comparing it to its historical volatility, SLR Investment Corp is 1.67 times less risky than JAPAN TOBACCO. It trades about 0.08 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 934.00 in JAPAN TOBACCO UNSPADR12 on September 1, 2024 and sell it today you would earn a total of 336.00 from holding JAPAN TOBACCO UNSPADR12 or generate 35.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| SLR Investment Corp |
| JAPAN TOBACCO UNSPADR12 |
SLR Investment and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and JAPAN TOBACCO
The main advantage of trading using opposite SLR Investment and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| SLR Investment vs. Ameriprise Financial | SLR Investment vs. Ares Management Corp | SLR Investment vs. Superior Plus Corp | SLR Investment vs. NMI Holdings |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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