Correlation Between NTT DATA and Arthur J

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

By analyzing existing cross correlation between NTT DATA and Arthur J Gallagher, you can compare the effects of market volatilities on NTT DATA and Arthur J 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 NTT DATA with a short position of Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTT DATA and Arthur J.

Diversification Opportunities for NTT DATA and Arthur J

-0.02

Correlation Coefficient

NTT DATA  Arthur J

Good diversification

The 3 months correlation between NTT and Arthur is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NTT DATA and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and NTT DATA 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 NTT DATA are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of NTT DATA i.e., NTT DATA and Arthur J go up and down completely randomly.

Pair Corralation between NTT DATA and Arthur J

Assuming the 90 days trading horizon NTT DATA is expected to under-perform the Arthur J. In addition to that, NTT DATA is 1.25 times more volatile than Arthur J Gallagher. It trades about -0.03 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.13 per unit of volatility. If you would invest  26,779  in Arthur J Gallagher on December 19, 2024 and sell it today you would earn a total of  3,221  from holding Arthur J Gallagher or generate 12.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NTT DATA   vs.  Arthur J Gallagher

NTT DATA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTT DATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NTT DATA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Arthur J Gallagher

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NTT DATA and Arthur J

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

The idea behind NTT DATA and Arthur J Gallagher 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..