Correlation Between ITOCHU and Iwatani
Can any of the company-specific risk be diversified away by investing in both ITOCHU and Iwatani 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 ITOCHU and Iwatani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and Iwatani, you can compare the effects of market volatilities on ITOCHU and Iwatani 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 ITOCHU with a short position of Iwatani. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and Iwatani.
Diversification Opportunities for ITOCHU and Iwatani
Weak diversification
The 3 months correlation between ITOCHU and Iwatani is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Iwatani in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iwatani and ITOCHU 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 ITOCHU are associated (or correlated) with Iwatani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iwatani has no effect on the direction of ITOCHU i.e., ITOCHU and Iwatani go up and down completely randomly.
Pair Corralation between ITOCHU and Iwatani
Assuming the 90 days horizon ITOCHU is expected to generate 1.13 times more return on investment than Iwatani. However, ITOCHU is 1.13 times more volatile than Iwatani. It trades about 0.03 of its potential returns per unit of risk. Iwatani is currently generating about -0.14 per unit of risk. If you would invest 4,675 in ITOCHU on September 17, 2024 and sell it today you would earn a total of 125.00 from holding ITOCHU or generate 2.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ITOCHU vs. Iwatani
Performance |
Timeline |
ITOCHU |
Iwatani |
ITOCHU and Iwatani Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ITOCHU and Iwatani
The main advantage of trading using opposite ITOCHU and Iwatani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU position performs unexpectedly, Iwatani 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 Iwatani will offset losses from the drop in Iwatani's long position.ITOCHU vs. Marubeni | ITOCHU vs. Sumitomo | ITOCHU vs. Superior Plus Corp | ITOCHU vs. SIVERS SEMICONDUCTORS AB |
Iwatani vs. Singapore Telecommunications Limited | Iwatani vs. United Internet AG | Iwatani vs. GameStop Corp | Iwatani vs. Charter Communications |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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