Correlation Between Scandinavian Tobacco and BG Foods
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and BG Foods 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 BG Foods 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 BG Foods, you can compare the effects of market volatilities on Scandinavian Tobacco and BG Foods 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 BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and BG Foods.
Diversification Opportunities for Scandinavian Tobacco and BG Foods
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scandinavian and DHR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and BG Foods go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and BG Foods
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.86 times more return on investment than BG Foods. However, Scandinavian Tobacco is 1.86 times more volatile than BG Foods. It trades about 0.06 of its potential returns per unit of risk. BG Foods is currently generating about 0.0 per unit of risk. If you would invest 663.00 in Scandinavian Tobacco Group on October 16, 2024 and sell it today you would earn a total of 625.00 from holding Scandinavian Tobacco Group or generate 94.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. BG Foods
Performance |
| Timeline |
| Scandinavian Tobacco |
| BG Foods |
Scandinavian Tobacco and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and BG Foods
The main advantage of trading using opposite Scandinavian Tobacco and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.| Scandinavian Tobacco vs. Choice Hotels International | Scandinavian Tobacco vs. PPHE HOTEL GROUP | Scandinavian Tobacco vs. DALATA HOTEL | Scandinavian Tobacco vs. Westinghouse Air Brake |
| BG Foods vs. MAGNUM MINING EXP | BG Foods vs. Caseys General Stores | BG Foods vs. BURLINGTON STORES | BG Foods vs. National Retail Properties |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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