Correlation Between Scandinavian Tobacco and Enbridge
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Enbridge 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 Enbridge 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 Enbridge, you can compare the effects of market volatilities on Scandinavian Tobacco and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Enbridge.
Diversification Opportunities for Scandinavian Tobacco and Enbridge
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and Enbridge is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Enbridge go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Enbridge
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Enbridge. In addition to that, Scandinavian Tobacco is 1.15 times more volatile than Enbridge. It trades about -0.01 of its total potential returns per unit of risk. Enbridge is currently generating about 0.08 per unit of volatility. If you would invest 4,699 in Enbridge on September 4, 2024 and sell it today you would earn a total of 1,442 from holding Enbridge or generate 30.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 54.31% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Enbridge
Performance |
| Timeline |
| Scandinavian Tobacco |
| Enbridge |
Scandinavian Tobacco and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Enbridge
The main advantage of trading using opposite Scandinavian Tobacco and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Scandinavian Tobacco vs. Bisichi Mining PLC | Scandinavian Tobacco vs. Ecclesiastical Insurance Office | Scandinavian Tobacco vs. Alfa Financial Software | Scandinavian Tobacco vs. GoldMining |
| Enbridge vs. Broadcom | Enbridge vs. Scandinavian Tobacco Group | Enbridge vs. Invesco Physical Silver | Enbridge vs. Alliance Data Systems |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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