Correlation Between Eat Beyond and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Eat Beyond 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 Eat Beyond and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eat Beyond Global and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Eat Beyond 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 Eat Beyond with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eat Beyond and Scandinavian Tobacco.
Diversification Opportunities for Eat Beyond and Scandinavian Tobacco
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eat and Scandinavian is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eat Beyond Global and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Eat Beyond 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 Eat Beyond Global 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 Eat Beyond i.e., Eat Beyond and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Eat Beyond and Scandinavian Tobacco
Assuming the 90 days horizon Eat Beyond Global is expected to generate 40.8 times more return on investment than Scandinavian Tobacco. However, Eat Beyond is 40.8 times more volatile than Scandinavian Tobacco Group. It trades about 0.22 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.29 per unit of risk. If you would invest 4.10 in Eat Beyond Global on August 28, 2024 and sell it today you would earn a total of 5.30 from holding Eat Beyond Global or generate 129.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eat Beyond Global vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Eat Beyond Global |
| Scandinavian Tobacco |
Eat Beyond and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eat Beyond and Scandinavian Tobacco
The main advantage of trading using opposite Eat Beyond and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eat Beyond 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.| Eat Beyond vs. Blackstone Group | Eat Beyond vs. BlackRock | Eat Beyond vs. Apollo Global Management | Eat Beyond vs. Bank of New |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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