Correlation Between WisdomTree Investments and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and IMPERIAL 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 WisdomTree Investments and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and IMPERIAL TOBACCO , you can compare the effects of market volatilities on WisdomTree Investments and IMPERIAL 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 WisdomTree Investments with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and IMPERIAL TOBACCO.
Diversification Opportunities for WisdomTree Investments and IMPERIAL TOBACCO
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and IMPERIAL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and WisdomTree Investments 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 WisdomTree Investments are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between WisdomTree Investments and IMPERIAL TOBACCO
Assuming the 90 days horizon WisdomTree Investments is expected to generate 2.26 times more return on investment than IMPERIAL TOBACCO. However, WisdomTree Investments is 2.26 times more volatile than IMPERIAL TOBACCO . It trades about 0.13 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.25 per unit of risk. If you would invest 904.00 in WisdomTree Investments on September 3, 2024 and sell it today you would earn a total of 222.00 from holding WisdomTree Investments or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| WisdomTree Investments |
| IMPERIAL TOBACCO |
WisdomTree Investments and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and IMPERIAL TOBACCO
The main advantage of trading using opposite WisdomTree Investments and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, IMPERIAL 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| WisdomTree Investments vs. United Natural Foods | WisdomTree Investments vs. Solstad Offshore ASA | WisdomTree Investments vs. PKSHA TECHNOLOGY INC | WisdomTree Investments vs. DXC Technology Co |
| IMPERIAL TOBACCO vs. Gamma Communications plc | IMPERIAL TOBACCO vs. WisdomTree Investments | IMPERIAL TOBACCO vs. Strategic Investments AS | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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