Correlation Between Casio Computer and T.J. Maxx

Can any of the company-specific risk be diversified away by investing in both Casio Computer and T.J. Maxx 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 Casio Computer and T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Casio Computer CoLtd and The TJX Companies, you can compare the effects of market volatilities on Casio Computer and T.J. Maxx 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 Casio Computer with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and T.J. Maxx.

Diversification Opportunities for Casio Computer and T.J. Maxx

0.64

Correlation Coefficient

Casio Computer  T.J. Maxx

Poor diversification

The 3 months correlation between Casio and T.J. is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Casio Computer 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 Casio Computer CoLtd are associated (or correlated) with T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Casio Computer i.e., Casio Computer and T.J. Maxx go up and down completely randomly.

Pair Corralation between Casio Computer and T.J. Maxx

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the T.J. Maxx. In addition to that, Casio Computer is 1.43 times more volatile than The TJX Companies. It trades about -0.16 of its total potential returns per unit of risk. The TJX Companies is currently generating about -0.06 per unit of volatility. If you would invest  11,896  in The TJX Companies on October 26, 2024 and sell it today you would lose (124.00) from holding The TJX Companies or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Casio Computer CoLtd  vs.  The TJX Companies

Casio Computer CoLtd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

TJX Companies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T.J. Maxx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Casio Computer and T.J. Maxx

The main advantage of trading using opposite Casio Computer and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.

The idea behind Casio Computer CoLtd and The TJX Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.