Correlation Between Nintendo Ltd-Ord and Activision Blizzard

By analyzing existing cross correlation between Nintendo Ltd-Ord and Activision Blizzard, you can compare the effects of market volatilities on Nintendo Ltd-Ord and Activision Blizzard 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 Nintendo Ltd-Ord with a short position of Activision Blizzard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo Ltd-Ord and Activision Blizzard.

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Can any of the company-specific risk be diversified away by investing in both Nintendo Ltd-Ord and Activision Blizzard 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 Nintendo Ltd-Ord and Activision Blizzard into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Nintendo Ltd-Ord and Activision Blizzard

0.87
  Correlation Coefficient
Nintendo Ltd-Ord
Activision Blizzard

Very poor diversification

The 3 months correlation between Nintendo and Activision is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Ltd-Ord and Activision Blizzard in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard and Nintendo Ltd-Ord 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 Nintendo Ltd-Ord are associated (or correlated) with Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of Nintendo Ltd-Ord i.e., Nintendo Ltd-Ord and Activision Blizzard go up and down completely randomly.

Pair Corralation between Nintendo Ltd-Ord and Activision Blizzard

Assuming the 90 days horizon Nintendo Ltd-Ord is expected to generate 1.2 times more return on investment than Activision Blizzard. However, Nintendo Ltd-Ord is 1.2 times more volatile than Activision Blizzard. It trades about 0.03 of its potential returns per unit of risk. Activision Blizzard is currently generating about 0.04 per unit of risk. If you would invest  37,989  in Nintendo Ltd-Ord on June 24, 2021 and sell it today you would earn a total of  11,323  from holding Nintendo Ltd-Ord or generate 29.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.4%
ValuesDaily Returns

Nintendo Ltd-Ord  vs.  Activision Blizzard

 Performance (%) 
      Timeline 
Nintendo Ltd-Ord 
 Nintendo Performance
0 of 100
Over the last 90 days Nintendo Ltd-Ord has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in October 2021. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nintendo Price Channel

Activision Blizzard 
 Activision Performance
0 of 100
Over the last 90 days Activision Blizzard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in October 2021. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Activision Price Channel

Nintendo Ltd-Ord and Activision Blizzard Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Nintendo Ltd-Ord and Activision Blizzard

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

Nintendo Ltd-Ord

Pair trading matchups for Nintendo Ltd-Ord

The idea behind Nintendo Ltd-Ord and Activision Blizzard 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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