Correlation Between Daikin IndustriesLtd and Lixil Group
Can any of the company-specific risk be diversified away by investing in both Daikin IndustriesLtd and Lixil Group 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 Daikin IndustriesLtd and Lixil Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daikin IndustriesLtd and Lixil Group Corp, you can compare the effects of market volatilities on Daikin IndustriesLtd and Lixil Group 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 Daikin IndustriesLtd with a short position of Lixil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daikin IndustriesLtd and Lixil Group.
Diversification Opportunities for Daikin IndustriesLtd and Lixil Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daikin and Lixil is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Daikin IndustriesLtd and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp and Daikin IndustriesLtd 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 Daikin IndustriesLtd are associated (or correlated) with Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of Daikin IndustriesLtd i.e., Daikin IndustriesLtd and Lixil Group go up and down completely randomly.
Pair Corralation between Daikin IndustriesLtd and Lixil Group
Assuming the 90 days horizon Daikin IndustriesLtd is expected to generate 2.5 times more return on investment than Lixil Group. However, Daikin IndustriesLtd is 2.5 times more volatile than Lixil Group Corp. It trades about 0.01 of its potential returns per unit of risk. Lixil Group Corp is currently generating about -0.01 per unit of risk. If you would invest 13,607 in Daikin IndustriesLtd on December 8, 2024 and sell it today you would lose (1,510) from holding Daikin IndustriesLtd or give up 11.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Daikin IndustriesLtd vs. Lixil Group Corp
Performance |
Timeline |
Daikin IndustriesLtd |
Lixil Group Corp |
Daikin IndustriesLtd and Lixil Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daikin IndustriesLtd and Lixil Group
The main advantage of trading using opposite Daikin IndustriesLtd and Lixil Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daikin IndustriesLtd position performs unexpectedly, Lixil Group 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 Lixil Group will offset losses from the drop in Lixil Group's long position.Daikin IndustriesLtd vs. Lennox International | Daikin IndustriesLtd vs. Lixil Group Corp | Daikin IndustriesLtd vs. Quanex Building Products | Daikin IndustriesLtd vs. Trane Technologies plc |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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