Correlation Between Scandinavian Tobacco and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on Scandinavian Tobacco and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Wheaton Precious.
Diversification Opportunities for Scandinavian Tobacco and Wheaton Precious
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Wheaton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Wheaton Precious go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Wheaton Precious
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.65 times less risky than Wheaton Precious. The stock trades about 0.0 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 315,799 in Wheaton Precious Metals on August 30, 2024 and sell it today you would earn a total of 169,701 from holding Wheaton Precious Metals or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Wheaton Precious Metals
Performance |
| Timeline |
| Scandinavian Tobacco |
| Wheaton Precious Metals |
Scandinavian Tobacco and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Wheaton Precious
The main advantage of trading using opposite Scandinavian Tobacco and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| Scandinavian Tobacco vs. Verizon Communications | Scandinavian Tobacco vs. Brunner Investment Trust | Scandinavian Tobacco vs. Gaztransport et Technigaz | Scandinavian Tobacco vs. Zegona Communications Plc |
| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Centamin PLC | Wheaton Precious vs. Atalaya Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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