Correlation Between Scandinavian Tobacco and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Scandinavian Tobacco and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and International Consolidated.
Diversification Opportunities for Scandinavian Tobacco and International Consolidated
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and International is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and International Consolidated go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and International Consolidated
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the International Consolidated. In addition to that, Scandinavian Tobacco is 1.48 times more volatile than International Consolidated Airlines. It trades about -0.09 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.52 per unit of volatility. If you would invest 283.00 in International Consolidated Airlines on September 14, 2024 and sell it today you would earn a total of 65.00 from holding International Consolidated Airlines or generate 22.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. International Consolidated Air
Performance |
| Timeline |
| Scandinavian Tobacco |
| International Consolidated |
Scandinavian Tobacco and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and International Consolidated
The main advantage of trading using opposite Scandinavian Tobacco and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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