Correlation Between Tokio Marine and Beazley PLC

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

By analyzing existing cross correlation between Tokio Marine Holdings and Beazley PLC, you can compare the effects of market volatilities on Tokio Marine and Beazley PLC 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 Tokio Marine with a short position of Beazley PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokio Marine and Beazley PLC.

Diversification Opportunities for Tokio Marine and Beazley PLC

0.03

Correlation Coefficient

Tokio Marine  Beazley PLC

Significant diversification

The 3 months correlation between Tokio and Beazley is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tokio Marine Holdings and Beazley PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazley PLC and Tokio Marine 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 Tokio Marine Holdings are associated (or correlated) with Beazley PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazley PLC has no effect on the direction of Tokio Marine i.e., Tokio Marine and Beazley PLC go up and down completely randomly.

Pair Corralation between Tokio Marine and Beazley PLC

Assuming the 90 days horizon Tokio Marine is expected to generate 1.28 times less return on investment than Beazley PLC. But when comparing it to its historical volatility, Tokio Marine Holdings is 1.02 times less risky than Beazley PLC. It trades about 0.05 of its potential returns per unit of risk. Beazley PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  724.00  in Beazley PLC on October 22, 2024 and sell it today you would earn a total of  261.00  from holding Beazley PLC or generate 36.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Tokio Marine Holdings  vs.  Beazley PLC

Tokio Marine Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Beazley PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beazley PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Beazley PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tokio Marine and Beazley PLC

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

The idea behind Tokio Marine Holdings and Beazley PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.