Correlation Between Western Copper and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Scandinavian Tobacco.
Diversification Opportunities for Western Copper and Scandinavian Tobacco
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Scandinavian is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Western Copper 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 Western Copper and 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 Western Copper i.e., Western Copper and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Western Copper and Scandinavian Tobacco
Assuming the 90 days trading horizon Western Copper and is expected to generate 1.5 times more return on investment than Scandinavian Tobacco. However, Western Copper is 1.5 times more volatile than Scandinavian Tobacco Group. It trades about 0.01 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.09 per unit of risk. If you would invest 104.00 in Western Copper and on September 14, 2024 and sell it today you would lose (1.00) from holding Western Copper and or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Western Copper |
| Scandinavian Tobacco |
Western Copper and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Scandinavian Tobacco
The main advantage of trading using opposite Western Copper and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
| Scandinavian Tobacco vs. CITIC Telecom International | Scandinavian Tobacco vs. SBM OFFSHORE | Scandinavian Tobacco vs. CHINA TELECOM H | Scandinavian Tobacco vs. Cogent Communications Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| CEOs Directory Screen CEOs from public companies around the world |