Correlation Between Japan Tobacco and HUNTINGTON

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

By analyzing existing cross correlation between Japan Tobacco ADR and HUNTINGTON BANCSHARES INC, you can compare the effects of market volatilities on Japan Tobacco and HUNTINGTON 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 Japan Tobacco with a short position of HUNTINGTON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and HUNTINGTON.

Diversification Opportunities for Japan Tobacco and HUNTINGTON

0.16

Correlation Coefficient

Japan Tobacco  HUNTINGTON

Average diversification

The 3 months correlation between Japan and HUNTINGTON is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and HUNTINGTON BANCSHARES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUNTINGTON BANCSHARES INC and Japan Tobacco 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 Japan Tobacco ADR are associated (or correlated) with HUNTINGTON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUNTINGTON BANCSHARES INC has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and HUNTINGTON go up and down completely randomly.

Pair Corralation between Japan Tobacco and HUNTINGTON

Assuming the 90 days horizon Japan Tobacco ADR is expected to generate 1.13 times more return on investment than HUNTINGTON. However, Japan Tobacco is 1.13 times more volatile than HUNTINGTON BANCSHARES INC. It trades about -0.05 of its potential returns per unit of risk. HUNTINGTON BANCSHARES INC is currently generating about -0.12 per unit of risk. If you would invest  1,351  in Japan Tobacco ADR on September 23, 2024 and sell it today you would lose (30.00) from holding Japan Tobacco ADR or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Japan Tobacco ADR  vs.  HUNTINGTON BANCSHARES INC

Japan Tobacco ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Tobacco ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

HUNTINGTON BANCSHARES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUNTINGTON BANCSHARES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUNTINGTON BANCSHARES INC investors.

Pair Trading with Japan Tobacco and HUNTINGTON

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

The idea behind Japan Tobacco ADR and HUNTINGTON BANCSHARES INC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.