Correlation Between Japan Smaller and Swiss Helvetia
Can any of the company-specific risk be diversified away by investing in both Japan Smaller and Swiss Helvetia 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 Smaller and Swiss Helvetia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Smaller Capitalization and Swiss Helvetia Closed, you can compare the effects of market volatilities on Japan Smaller and Swiss Helvetia 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 Smaller with a short position of Swiss Helvetia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Smaller and Swiss Helvetia.
Diversification Opportunities for Japan Smaller and Swiss Helvetia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Swiss is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Japan Smaller Capitalization and Swiss Helvetia Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Helvetia Closed and Japan Smaller 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 Smaller Capitalization are associated (or correlated) with Swiss Helvetia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Helvetia Closed has no effect on the direction of Japan Smaller i.e., Japan Smaller and Swiss Helvetia go up and down completely randomly.
Pair Corralation between Japan Smaller and Swiss Helvetia
Considering the 90-day investment horizon Japan Smaller Capitalization is expected to generate 1.3 times more return on investment than Swiss Helvetia. However, Japan Smaller is 1.3 times more volatile than Swiss Helvetia Closed. It trades about -0.13 of its potential returns per unit of risk. Swiss Helvetia Closed is currently generating about -0.22 per unit of risk. If you would invest 783.00 in Japan Smaller Capitalization on February 2, 2024 and sell it today you would lose (20.00) from holding Japan Smaller Capitalization or give up 2.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Japan Smaller Capitalization vs. Swiss Helvetia Closed
Performance |
Timeline |
Japan Smaller Capita |
Swiss Helvetia Closed |
Japan Smaller and Swiss Helvetia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Japan Smaller and Swiss Helvetia
The main advantage of trading using opposite Japan Smaller and Swiss Helvetia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Smaller position performs unexpectedly, Swiss Helvetia 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 Swiss Helvetia will offset losses from the drop in Swiss Helvetia's long position.Japan Smaller vs. Aquagold International | Japan Smaller vs. Morningstar Unconstrained Allocation | Japan Smaller vs. High Yield Municipal Fund | Japan Smaller vs. Thrivent High Yield |
Swiss Helvetia vs. Aquagold International | Swiss Helvetia vs. Morningstar Unconstrained Allocation | Swiss Helvetia vs. High Yield Municipal Fund | Swiss Helvetia vs. Thrivent High Yield |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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