Correlation Between Canon Marketing and Fortune Brands

Can any of the company-specific risk be diversified away by investing in both Canon Marketing and Fortune Brands 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 Canon Marketing and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canon Marketing Japan and Fortune Brands Home, you can compare the effects of market volatilities on Canon Marketing and Fortune Brands 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 Canon Marketing with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and Fortune Brands.

Diversification Opportunities for Canon Marketing and Fortune Brands

-0.3

Correlation Coefficient

Canon Marketing  Fortune Brands

Very good diversification

The 3 months correlation between Canon and Fortune is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Canon Marketing i.e., Canon Marketing and Fortune Brands go up and down completely randomly.

Pair Corralation between Canon Marketing and Fortune Brands

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.63 times more return on investment than Fortune Brands. However, Canon Marketing Japan is 1.59 times less risky than Fortune Brands. It trades about -0.04 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.11 per unit of risk. If you would invest  3,100  in Canon Marketing Japan on December 21, 2024 and sell it today you would lose (100.00) from holding Canon Marketing Japan or give up 3.23% of portfolio value over 90 days.

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

Canon Marketing Japan  vs.  Fortune Brands Home

Canon Marketing Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canon Marketing Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon Marketing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Fortune Brands Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Canon Marketing and Fortune Brands

The main advantage of trading using opposite Canon Marketing and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon Marketing position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.

The idea behind Canon Marketing Japan and Fortune Brands Home 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.