Correlation Between Pinnacle West and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Pinnacle West and Scandinavian Tobacco 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 Pinnacle West and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle West Capital and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Pinnacle West and Scandinavian Tobacco 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 Pinnacle West with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle West and Scandinavian Tobacco.
Diversification Opportunities for Pinnacle West and Scandinavian Tobacco
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pinnacle and Scandinavian is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle West Capital and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Pinnacle West 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 Pinnacle West Capital are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Pinnacle West i.e., Pinnacle West and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Pinnacle West and Scandinavian Tobacco
Assuming the 90 days trading horizon Pinnacle West Capital is expected to generate 0.89 times more return on investment than Scandinavian Tobacco. However, Pinnacle West Capital is 1.13 times less risky than Scandinavian Tobacco. It trades about 0.21 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.13 per unit of risk. If you would invest 8,730 in Pinnacle West Capital on September 1, 2024 and sell it today you would earn a total of 673.00 from holding Pinnacle West Capital or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinnacle West Capital vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Pinnacle West Capital |
| Scandinavian Tobacco |
Pinnacle West and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle West and Scandinavian Tobacco
The main advantage of trading using opposite Pinnacle West and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle West position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Pinnacle West vs. Uniper SE | Pinnacle West vs. Mulberry Group PLC | Pinnacle West vs. London Security Plc | Pinnacle West vs. Triad Group PLC |
| Scandinavian Tobacco vs. Uniper SE | Scandinavian Tobacco vs. Mulberry Group PLC | Scandinavian Tobacco vs. London Security Plc | Scandinavian Tobacco vs. Triad Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |