Correlation Between Scandinavian Tobacco and ARDAGH METAL
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and ARDAGH METAL 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 ARDAGH METAL 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 ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on Scandinavian Tobacco and ARDAGH METAL 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 ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and ARDAGH METAL.
Diversification Opportunities for Scandinavian Tobacco and ARDAGH METAL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and ARDAGH is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL 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 ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and ARDAGH METAL go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and ARDAGH METAL
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.45 times more return on investment than ARDAGH METAL. However, Scandinavian Tobacco is 1.45 times more volatile than ARDAGH METAL PACDL 0001. It trades about 0.06 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about 0.02 per unit of risk. If you would invest 435.00 in Scandinavian Tobacco Group on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Scandinavian Tobacco Group or generate 192.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. ARDAGH METAL PACDL 0001
Performance |
| Timeline |
| Scandinavian Tobacco |
| ARDAGH METAL PACDL |
Scandinavian Tobacco and ARDAGH METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and ARDAGH METAL
The main advantage of trading using opposite Scandinavian Tobacco and ARDAGH METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, ARDAGH METAL 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 ARDAGH METAL will offset losses from the drop in ARDAGH METAL's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands PLC |
| ARDAGH METAL vs. AptarGroup | ARDAGH METAL vs. Superior Plus Corp | ARDAGH METAL vs. NMI Holdings | ARDAGH METAL vs. Origin Agritech |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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