Correlation Between Hawkins and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Hawkins 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 Hawkins and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Hawkins 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 Hawkins with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Scandinavian Tobacco.
Diversification Opportunities for Hawkins and Scandinavian Tobacco
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawkins and Scandinavian is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Hawkins and Scandinavian Tobacco
Given the investment horizon of 90 days Hawkins is expected to generate 2.21 times more return on investment than Scandinavian Tobacco. However, Hawkins is 2.21 times more volatile than Scandinavian Tobacco Group. It trades about 0.43 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.28 per unit of risk. If you would invest 10,675 in Hawkins on September 1, 2024 and sell it today you would earn a total of 2,776 from holding Hawkins or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hawkins vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Hawkins |
| Scandinavian Tobacco |
Hawkins and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Scandinavian Tobacco
The main advantage of trading using opposite Hawkins and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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