Correlation Between Imperial Brands and Vector

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

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

Diversification Opportunities for Imperial Brands and Vector

0.0

Correlation Coefficient

Imperial Brands  Vector

Pay attention - limited upside

The 3 months correlation between Imperial and Vector is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Vector Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vector Group and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Vector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vector Group has no effect on the direction of Imperial Brands i.e., Imperial Brands and Vector go up and down completely randomly.

Pair Corralation between Imperial Brands and Vector

If you would invest  3,356  in Imperial Brands PLC on November 28, 2024 and sell it today you would earn a total of  179.00  from holding Imperial Brands PLC or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Imperial Brands PLC  vs.  Vector Group

Imperial Brands PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Brands PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Imperial Brands may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Vector Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vector Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Vector is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Imperial Brands and Vector

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

The idea behind Imperial Brands PLC and Vector Group 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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.