Correlation Between Scandinavian Tobacco and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Willis Towers 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 Willis Towers 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 Willis Towers Watson, you can compare the effects of market volatilities on Scandinavian Tobacco and Willis Towers 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 Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Willis Towers.
Diversification Opportunities for Scandinavian Tobacco and Willis Towers
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and Willis is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson 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 Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Willis Towers go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Willis Towers
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 6.98 times less return on investment than Willis Towers. In addition to that, Scandinavian Tobacco is 1.21 times more volatile than Willis Towers Watson. It trades about 0.02 of its total potential returns per unit of risk. Willis Towers Watson is currently generating about 0.15 per unit of volatility. If you would invest 23,367 in Willis Towers Watson on October 13, 2024 and sell it today you would earn a total of 7,033 from holding Willis Towers Watson or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Willis Towers Watson
Performance |
| Timeline |
| Scandinavian Tobacco |
| Willis Towers Watson |
Scandinavian Tobacco and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Willis Towers
The main advantage of trading using opposite Scandinavian Tobacco and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Willis Towers 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 Willis Towers will offset losses from the drop in Willis Towers' long position.| Scandinavian Tobacco vs. ORMAT TECHNOLOGIES | Scandinavian Tobacco vs. PKSHA TECHNOLOGY INC | Scandinavian Tobacco vs. OURGAME INTHOLDL 00005 | Scandinavian Tobacco vs. CONTAGIOUS GAMING INC |
| Willis Towers vs. DATAGROUP SE | Willis Towers vs. Information Services International Dentsu | Willis Towers vs. Scandinavian Tobacco Group | Willis Towers vs. Jacquet Metal Service |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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