Correlation Between Diversified Energy and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Diversified Energy 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 Diversified Energy and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Energy and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Diversified Energy 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 Diversified Energy with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Energy and Scandinavian Tobacco.
Diversification Opportunities for Diversified Energy and Scandinavian Tobacco
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diversified and Scandinavian is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Energy and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Diversified Energy 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 Diversified Energy 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 Diversified Energy i.e., Diversified Energy and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Diversified Energy and Scandinavian Tobacco
Assuming the 90 days trading horizon Diversified Energy is expected to generate 2.93 times more return on investment than Scandinavian Tobacco. However, Diversified Energy is 2.93 times more volatile than Scandinavian Tobacco Group. It trades about 0.39 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.11 per unit of risk. If you would invest 103,177 in Diversified Energy on September 14, 2024 and sell it today you would earn a total of 27,723 from holding Diversified Energy or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Energy vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Diversified Energy |
| Scandinavian Tobacco |
Diversified Energy and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Energy and Scandinavian Tobacco
The main advantage of trading using opposite Diversified Energy and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Energy 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.| Diversified Energy vs. Zoom Video Communications | Diversified Energy vs. Enbridge | Diversified Energy vs. Endo International PLC | Diversified Energy vs. Quantum Blockchain Technologies |
| Scandinavian Tobacco vs. Aurora Investment Trust | Scandinavian Tobacco vs. Blackrock World Mining | Scandinavian Tobacco vs. FC Investment Trust | Scandinavian Tobacco vs. METALL ZUG AG |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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