Correlation Between Imperial Brands and Calibre Mining

Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Calibre Mining 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 Calibre Mining 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 Calibre Mining Corp, you can compare the effects of market volatilities on Imperial Brands and Calibre Mining 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 Calibre Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Calibre Mining.

Diversification Opportunities for Imperial Brands and Calibre Mining

-0.51

Correlation Coefficient

Imperial Brands  Calibre Mining

Excellent diversification

The 3 months correlation between Imperial and Calibre is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Imperial Brands i.e., Imperial Brands and Calibre Mining go up and down completely randomly.

Pair Corralation between Imperial Brands and Calibre Mining

Assuming the 90 days horizon Imperial Brands PLC is expected to generate 0.44 times more return on investment than Calibre Mining. However, Imperial Brands PLC is 2.27 times less risky than Calibre Mining. It trades about 0.25 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about -0.08 per unit of risk. If you would invest  2,630  in Imperial Brands PLC on October 9, 2024 and sell it today you would earn a total of  500.00  from holding Imperial Brands PLC or generate 19.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Imperial Brands PLC  vs.  Calibre Mining Corp

Imperial Brands PLC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Brands PLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Imperial Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Imperial Brands and Calibre Mining

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

The idea behind Imperial Brands PLC and Calibre Mining Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.