Correlation Between Fevertree Drinks and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Scandinavian Tobacco.
Diversification Opportunities for Fevertree Drinks and Scandinavian Tobacco
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fevertree and Scandinavian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Scandinavian Tobacco
Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Scandinavian Tobacco. In addition to that, Fevertree Drinks is 1.11 times more volatile than Scandinavian Tobacco Group. It trades about -0.06 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.02 per unit of volatility. If you would invest 664.00 in Scandinavian Tobacco Group on September 2, 2024 and sell it today you would earn a total of 52.00 from holding Scandinavian Tobacco Group or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.32% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Scandinavian Tobacco |
Fevertree Drinks and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Scandinavian Tobacco
The main advantage of trading using opposite Fevertree Drinks and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. PepsiCo | Fevertree Drinks vs. Coca Cola Consolidated | Fevertree Drinks vs. Monster Beverage Corp | Fevertree Drinks vs. Celsius Holdings |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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