Correlation Between Hudson Pacific and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Hudson Pacific 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 Hudson Pacific and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Pacific Properties and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Hudson Pacific 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 Hudson Pacific with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Scandinavian Tobacco.
Diversification Opportunities for Hudson Pacific and Scandinavian Tobacco
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hudson and Scandinavian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Hudson Pacific 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 Hudson Pacific Properties 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 Hudson Pacific i.e., Hudson Pacific and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Hudson Pacific and Scandinavian Tobacco
Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Scandinavian Tobacco. In addition to that, Hudson Pacific is 4.94 times more volatile than Scandinavian Tobacco Group. It trades about -0.19 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.09 per unit of volatility. If you would invest 716.00 in Scandinavian Tobacco Group on October 13, 2024 and sell it today you would lose (16.00) from holding Scandinavian Tobacco Group or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hudson Pacific Properties vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Hudson Pacific Properties |
| Scandinavian Tobacco |
Hudson Pacific and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Pacific and Scandinavian Tobacco
The main advantage of trading using opposite Hudson Pacific and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific 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.| Hudson Pacific vs. Kilroy Realty Corp | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Cousins Properties Incorporated | Hudson Pacific vs. Piedmont Office Realty |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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