Correlation Between Albertsons Companies and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Scandinavian Tobacco 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 Albertsons Companies and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Albertsons Companies and Scandinavian Tobacco 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 Albertsons Companies with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Scandinavian Tobacco.
Diversification Opportunities for Albertsons Companies and Scandinavian Tobacco
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Albertsons and Scandinavian is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Albertsons Companies and Scandinavian Tobacco
Considering the 90-day investment horizon Albertsons Companies is expected to under-perform the Scandinavian Tobacco. But the stock apears to be less risky and, when comparing its historical volatility, Albertsons Companies is 1.15 times less risky than Scandinavian Tobacco. The stock trades about -0.04 of its potential returns per unit of risk. The Scandinavian Tobacco Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Scandinavian Tobacco Group on September 14, 2024 and sell it today you would lose (61.00) from holding Scandinavian Tobacco Group or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albertsons Companies vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Albertsons Companies |
| Scandinavian Tobacco |
Albertsons Companies and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albertsons Companies and Scandinavian Tobacco
The main advantage of trading using opposite Albertsons Companies and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Albertsons Companies vs. Sprouts Farmers Market | Albertsons Companies vs. Krispy Kreme | Albertsons Companies vs. Grocery Outlet Holding | Albertsons Companies vs. Weis Markets |
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 CEOs Directory module to screen CEOs from public companies around the world.
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