Correlation Between W P and Casio Computer

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

By analyzing existing cross correlation between W P Carey and Casio Computer CoLtd, you can compare the effects of market volatilities on W P and Casio Computer 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 W P with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and Casio Computer.

Diversification Opportunities for W P and Casio Computer

0.22

Correlation Coefficient

W P  Casio Computer

Modest diversification

The 3 months correlation between WPY and Casio is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd and W P 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 W P Carey are associated (or correlated) with Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of W P i.e., W P and Casio Computer go up and down completely randomly.

Pair Corralation between W P and Casio Computer

Assuming the 90 days horizon W P Carey is expected to under-perform the Casio Computer. But the stock apears to be less risky and, when comparing its historical volatility, W P Carey is 1.53 times less risky than Casio Computer. The stock trades about 0.0 of its potential returns per unit of risk. The Casio Computer CoLtd is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  681.00  in Casio Computer CoLtd on October 23, 2024 and sell it today you would earn a total of  92.00  from holding Casio Computer CoLtd or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

W P Carey  vs.  Casio Computer CoLtd

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

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

Casio Computer CoLtd

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with W P and Casio Computer

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

The idea behind W P Carey and Casio Computer CoLtd 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 Global Correlations module to find global opportunities by holding instruments from different markets.