Correlation Between Pure Storage and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Pure Storage 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 Pure Storage and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Pure Storage 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 Pure Storage with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and IMPERIAL TOBACCO.
Diversification Opportunities for Pure Storage and IMPERIAL TOBACCO
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pure and IMPERIAL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Pure Storage 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 Pure Storage 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 Pure Storage i.e., Pure Storage and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Pure Storage and IMPERIAL TOBACCO
Assuming the 90 days horizon Pure Storage is expected to generate 5.15 times less return on investment than IMPERIAL TOBACCO. In addition to that, Pure Storage is 2.54 times more volatile than IMPERIAL TOBACCO . It trades about 0.03 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.34 per unit of volatility. If you would invest 2,772 in IMPERIAL TOBACCO on August 27, 2024 and sell it today you would earn a total of 252.00 from holding IMPERIAL TOBACCO or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Pure Storage |
| IMPERIAL TOBACCO |
Pure Storage and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and IMPERIAL TOBACCO
The main advantage of trading using opposite Pure Storage and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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.The idea behind Pure Storage and IMPERIAL TOBACCO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IMPERIAL TOBACCO vs. Pure Storage | IMPERIAL TOBACCO vs. Stewart Information Services | IMPERIAL TOBACCO vs. CVS Health | IMPERIAL TOBACCO vs. National Health Investors |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |