Correlation Between Scandinavian Tobacco and NetApp
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and NetApp 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 NetApp 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 NetApp Inc, you can compare the effects of market volatilities on Scandinavian Tobacco and NetApp 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 NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and NetApp.
Diversification Opportunities for Scandinavian Tobacco and NetApp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and NetApp is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and NetApp go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and NetApp
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the NetApp. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.5 times less risky than NetApp. The stock trades about -0.02 of its potential returns per unit of risk. The NetApp Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,778 in NetApp Inc on September 12, 2024 and sell it today you would earn a total of 5,023 from holding NetApp Inc or generate 64.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.19% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. NetApp Inc
Performance |
| Timeline |
| Scandinavian Tobacco |
| NetApp Inc |
Scandinavian Tobacco and NetApp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and NetApp
The main advantage of trading using opposite Scandinavian Tobacco and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.| Scandinavian Tobacco vs. Hong Kong Land | Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Coor Service Management | Scandinavian Tobacco vs. Fidelity Sustainable USD |
| NetApp vs. Fulcrum Metals PLC | NetApp vs. GreenX Metals | NetApp vs. Take Two Interactive Software | NetApp vs. Scandinavian Tobacco Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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