Correlation Between Scandinavian Tobacco and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and ITALIAN WINE 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 ITALIAN WINE 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 ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Scandinavian Tobacco and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and ITALIAN WINE.
Diversification Opportunities for Scandinavian Tobacco and ITALIAN WINE
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and ITALIAN is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and ITALIAN WINE
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.54 times more return on investment than ITALIAN WINE. However, Scandinavian Tobacco Group is 1.85 times less risky than ITALIAN WINE. It trades about 0.08 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.02 per unit of risk. If you would invest 1,270 in Scandinavian Tobacco Group on October 11, 2024 and sell it today you would earn a total of 22.00 from holding Scandinavian Tobacco Group or generate 1.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Scandinavian Tobacco Group vs. ITALIAN WINE BRANDS
Performance |
Timeline |
Scandinavian Tobacco |
ITALIAN WINE BRANDS |
Scandinavian Tobacco and ITALIAN WINE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scandinavian Tobacco and ITALIAN WINE
The main advantage of trading using opposite Scandinavian Tobacco and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.Scandinavian Tobacco vs. Daito Trust Construction | Scandinavian Tobacco vs. Dairy Farm International | Scandinavian Tobacco vs. Sumitomo Mitsui Construction | Scandinavian Tobacco vs. ecotel communication ag |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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