Correlation Between Toshiba and Marubeni Corp

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

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

Diversification Opportunities for Toshiba and Marubeni Corp

0.28

Correlation Coefficient

Toshiba  Marubeni Corp

Modest diversification

The 3 months correlation between Toshiba and Marubeni is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Toshiba and Marubeni Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni Corp ADR and Toshiba 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 Toshiba are associated (or correlated) with Marubeni Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni Corp ADR has no effect on the direction of Toshiba i.e., Toshiba and Marubeni Corp go up and down completely randomly.

Pair Corralation between Toshiba and Marubeni Corp

If you would invest  3,251  in Toshiba on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Toshiba or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Toshiba  vs.  Marubeni Corp ADR

Toshiba

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marubeni Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marubeni Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Pair Trading with Toshiba and Marubeni Corp

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

The idea behind Toshiba and Marubeni Corp ADR 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.