Correlation Between Gladstone Investment and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Scandinavian Tobacco.
Diversification Opportunities for Gladstone Investment and Scandinavian Tobacco
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gladstone and Scandinavian is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Gladstone Investment and Scandinavian Tobacco
Assuming the 90 days horizon Gladstone Investment is expected to generate 3.06 times less return on investment than Scandinavian Tobacco. But when comparing it to its historical volatility, Gladstone Investment is 1.22 times less risky than Scandinavian Tobacco. It trades about 0.09 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Scandinavian Tobacco Group on October 25, 2024 and sell it today you would earn a total of 70.00 from holding Scandinavian Tobacco Group or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Gladstone Investment |
| Scandinavian Tobacco |
Gladstone Investment and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Scandinavian Tobacco
The main advantage of trading using opposite Gladstone Investment and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.| Gladstone Investment vs. Guangdong Investment Limited | Gladstone Investment vs. USWE SPORTS AB | Gladstone Investment vs. BII Railway Transportation | Gladstone Investment vs. CHRYSALIS INVESTMENTS LTD |
| Scandinavian Tobacco vs. TYSON FOODS A | Scandinavian Tobacco vs. Nanjing Panda Electronics | Scandinavian Tobacco vs. Tyson Foods | Scandinavian Tobacco vs. Meiko Electronics Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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