Correlation Between Scandinavian Tobacco and New Residential
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Scandinavian Tobacco and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and New Residential.
Diversification Opportunities for Scandinavian Tobacco and New Residential
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and New is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and New Residential go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and New Residential
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the New Residential. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.38 times less risky than New Residential. The stock trades about -0.01 of its potential returns per unit of risk. The New Residential Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 695.00 in New Residential Investment on September 24, 2024 and sell it today you would earn a total of 400.00 from holding New Residential Investment or generate 57.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. New Residential Investment
Performance |
| Timeline |
| Scandinavian Tobacco |
| New Residential Inve |
Scandinavian Tobacco and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and New Residential
The main advantage of trading using opposite Scandinavian Tobacco and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Scandinavian Tobacco vs. Zegona Communications Plc | Scandinavian Tobacco vs. Hochschild Mining plc | Scandinavian Tobacco vs. Griffin Mining | Scandinavian Tobacco vs. Datagroup SE |
| New Residential vs. Uniper SE | New Residential vs. Mulberry Group PLC | New Residential vs. London Security Plc | New Residential 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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