Correlation Between Ecotel Communication and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Ecotel Communication and IMPERIAL 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 Ecotel Communication and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ecotel communication ag and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Ecotel Communication and IMPERIAL 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 Ecotel Communication with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and IMPERIAL TOBACCO.
Diversification Opportunities for Ecotel Communication and IMPERIAL TOBACCO
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecotel and IMPERIAL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Ecotel Communication and IMPERIAL TOBACCO
Assuming the 90 days trading horizon ecotel communication ag is expected to generate 1.83 times more return on investment than IMPERIAL TOBACCO. However, Ecotel Communication is 1.83 times more volatile than IMPERIAL TOBACCO . It trades about -0.12 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about -0.22 per unit of risk. If you would invest 1,410 in ecotel communication ag on October 16, 2024 and sell it today you would lose (35.00) from holding ecotel communication ag or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
ecotel communication ag vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| ecotel communication |
| IMPERIAL TOBACCO |
Ecotel Communication and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecotel Communication and IMPERIAL TOBACCO
The main advantage of trading using opposite Ecotel Communication and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecotel Communication position performs unexpectedly, IMPERIAL 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Ecotel Communication vs. Indutrade AB | Ecotel Communication vs. Salesforce | Ecotel Communication vs. YOOMA WELLNESS INC | Ecotel Communication vs. Acadia Healthcare |
| IMPERIAL TOBACCO vs. Direct Line Insurance | IMPERIAL TOBACCO vs. G III Apparel Group | IMPERIAL TOBACCO vs. De Grey Mining | IMPERIAL TOBACCO vs. PNC Financial Services |
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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