Correlation Between Scandinavian Tobacco and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on Scandinavian Tobacco and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Element Solutions.
Diversification Opportunities for Scandinavian Tobacco and Element Solutions
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Scandinavian and Element is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Element Solutions go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Element Solutions
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 3.36 times more return on investment than Element Solutions. However, Scandinavian Tobacco is 3.36 times more volatile than Element Solutions. It trades about 0.06 of its potential returns per unit of risk. Element Solutions is currently generating about 0.06 per unit of risk. If you would invest 507.00 in Scandinavian Tobacco Group on October 29, 2024 and sell it today you would earn a total of 815.00 from holding Scandinavian Tobacco Group or generate 160.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Element Solutions
Performance |
| Timeline |
| Scandinavian Tobacco |
| Element Solutions |
Scandinavian Tobacco and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Element Solutions
The main advantage of trading using opposite Scandinavian Tobacco and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Scandinavian Tobacco vs. Cal Maine Foods | Scandinavian Tobacco vs. EBRO FOODS | Scandinavian Tobacco vs. BOSTON BEER A | Scandinavian Tobacco vs. The Boston Beer |
| Element Solutions vs. SK TELECOM TDADR | Element Solutions vs. NORTHEAST UTILITIES | Element Solutions vs. UNITED UTILITIES GR | Element Solutions vs. COMBA TELECOM SYST |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |