Correlation Between Nippon Yusen and High-yield Municipal

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Can any of the company-specific risk be diversified away by investing in both Nippon Yusen and High-yield Municipal 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 Nippon Yusen and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Yusen Kabushiki and High Yield Municipal Fund, you can compare the effects of market volatilities on Nippon Yusen and High-yield Municipal 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 Nippon Yusen with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Yusen and High-yield Municipal.

Diversification Opportunities for Nippon Yusen and High-yield Municipal

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nippon and High-yield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Nippon Yusen 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 Nippon Yusen Kabushiki are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and High-yield Municipal go up and down completely randomly.

Pair Corralation between Nippon Yusen and High-yield Municipal

Assuming the 90 days horizon Nippon Yusen Kabushiki is expected to generate 10.02 times more return on investment than High-yield Municipal. However, Nippon Yusen is 10.02 times more volatile than High Yield Municipal Fund. It trades about 0.01 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about -0.04 per unit of risk. If you would invest  625.00  in Nippon Yusen Kabushiki on March 4, 2024 and sell it today you would earn a total of  3.00  from holding Nippon Yusen Kabushiki or generate 0.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nippon Yusen Kabushiki  vs.  High Yield Municipal Fund

 Performance 
       Timeline  
Nippon Yusen Kabushiki 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nippon Yusen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
High Yield Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days High Yield Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, High-yield Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nippon Yusen and High-yield Municipal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nippon Yusen and High-yield Municipal

The main advantage of trading using opposite Nippon Yusen and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Yusen position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.
The idea behind Nippon Yusen Kabushiki and High Yield Municipal Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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