Correlation Between ATHENE HOLDING and Imperial Brands

Can any of the company-specific risk be diversified away by investing in both ATHENE HOLDING and Imperial Brands 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 ATHENE HOLDING and Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATHENE HOLDING PRFSERC and Imperial Brands PLC, you can compare the effects of market volatilities on ATHENE HOLDING and Imperial Brands 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 ATHENE HOLDING with a short position of Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATHENE HOLDING and Imperial Brands.

Diversification Opportunities for ATHENE HOLDING and Imperial Brands

-0.62

Correlation Coefficient

ATHENE HOLDING  Imperial Brands

Excellent diversification

The 3 months correlation between ATHENE and Imperial is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ATHENE HOLDING PRFSERC and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC and ATHENE HOLDING 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 ATHENE HOLDING PRFSERC are associated (or correlated) with Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of ATHENE HOLDING i.e., ATHENE HOLDING and Imperial Brands go up and down completely randomly.

Pair Corralation between ATHENE HOLDING and Imperial Brands

Assuming the 90 days trading horizon ATHENE HOLDING PRFSERC is expected to under-perform the Imperial Brands. But the stock apears to be less risky and, when comparing its historical volatility, ATHENE HOLDING PRFSERC is 1.38 times less risky than Imperial Brands. The stock trades about -0.13 of its potential returns per unit of risk. The Imperial Brands PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,015  in Imperial Brands PLC on December 29, 2024 and sell it today you would earn a total of  350.00  from holding Imperial Brands PLC or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

ATHENE HOLDING PRFSERC  vs.  Imperial Brands PLC

ATHENE HOLDING PRFSERC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ATHENE HOLDING PRFSERC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Imperial Brands PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Brands PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, Imperial Brands may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATHENE HOLDING and Imperial Brands

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

The idea behind ATHENE HOLDING PRFSERC and Imperial Brands PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.