Correlation Between Scandinavian Tobacco and Tritax Big

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

By analyzing existing cross correlation between Scandinavian Tobacco Group and Tritax Big Box, you can compare the effects of market volatilities on Scandinavian Tobacco and Tritax Big 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 Scandinavian Tobacco with a short position of Tritax Big. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Tritax Big.

Diversification Opportunities for Scandinavian Tobacco and Tritax Big

0.78

Correlation Coefficient

Scandinavian Tobacco  Tritax Big

Poor diversification

The 3 months correlation between Scandinavian and Tritax is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Tritax Big Box in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritax Big Box and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Tritax Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritax Big Box has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Tritax Big go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Tritax Big

Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.64 times more return on investment than Tritax Big. However, Scandinavian Tobacco Group is 1.57 times less risky than Tritax Big. It trades about 0.41 of its potential returns per unit of risk. Tritax Big Box is currently generating about 0.07 per unit of risk. If you would invest  10,209  in Scandinavian Tobacco Group on December 4, 2024 and sell it today you would earn a total of  671.00  from holding Scandinavian Tobacco Group or generate 6.57% return on investment over 90 days.

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

Scandinavian Tobacco Group  vs.  Tritax Big Box

Scandinavian Tobacco

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scandinavian Tobacco Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Scandinavian Tobacco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tritax Big Box

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tritax Big Box are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Tritax Big may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Scandinavian Tobacco and Tritax Big

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

The idea behind Scandinavian Tobacco Group and Tritax Big Box 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.