Correlation Between JAPAN TOBACCO and AUSTEVOLL SEAFOOD
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and AUSTEVOLL SEAFOOD, you can compare the effects of market volatilities on JAPAN TOBACCO and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and AUSTEVOLL SEAFOOD.
Diversification Opportunities for JAPAN TOBACCO and AUSTEVOLL SEAFOOD
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JAPAN and AUSTEVOLL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD 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 UNSPADR12 are associated (or correlated) with AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and AUSTEVOLL SEAFOOD go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and AUSTEVOLL SEAFOOD
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.66 times more return on investment than AUSTEVOLL SEAFOOD. However, JAPAN TOBACCO UNSPADR12 is 1.52 times less risky than AUSTEVOLL SEAFOOD. It trades about -0.19 of its potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about -0.18 per unit of risk. If you would invest 1,260 in JAPAN TOBACCO UNSPADR12 on September 25, 2024 and sell it today you would lose (40.00) from holding JAPAN TOBACCO UNSPADR12 or give up 3.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. AUSTEVOLL SEAFOOD
Performance |
Timeline |
JAPAN TOBACCO UNSPADR12 |
AUSTEVOLL SEAFOOD |
JAPAN TOBACCO and AUSTEVOLL SEAFOOD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JAPAN TOBACCO and AUSTEVOLL SEAFOOD
The main advantage of trading using opposite JAPAN TOBACCO and AUSTEVOLL SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD will offset losses from the drop in AUSTEVOLL SEAFOOD's long position.JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco |
AUSTEVOLL SEAFOOD vs. Apple Inc | AUSTEVOLL SEAFOOD vs. Apple Inc | AUSTEVOLL SEAFOOD vs. Microsoft | AUSTEVOLL SEAFOOD vs. Microsoft |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Stocks Directory Find actively traded stocks across global markets | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |