Correlation Between Impax Environmental and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Impax Environmental 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 Impax Environmental and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Environmental Markets and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Impax Environmental 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 Impax Environmental with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Environmental and Scandinavian Tobacco.
Diversification Opportunities for Impax Environmental and Scandinavian Tobacco
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Impax and Scandinavian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Impax Environmental 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 Impax Environmental Markets 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 Impax Environmental i.e., Impax Environmental and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Impax Environmental and Scandinavian Tobacco
Assuming the 90 days trading horizon Impax Environmental Markets is expected to under-perform the Scandinavian Tobacco. But the stock apears to be less risky and, when comparing its historical volatility, Impax Environmental Markets is 1.47 times less risky than Scandinavian Tobacco. The stock trades about -0.01 of its potential returns per unit of risk. The Scandinavian Tobacco Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 10,025 in Scandinavian Tobacco Group on October 13, 2024 and sell it today you would lose (265.00) from holding Scandinavian Tobacco Group or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Environmental Markets vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Impax Environmental |
| Scandinavian Tobacco |
Impax Environmental and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Environmental and Scandinavian Tobacco
The main advantage of trading using opposite Impax Environmental and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental 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.| Impax Environmental vs. Allianz Technology Trust | Impax Environmental vs. Sabien Technology Group | Impax Environmental vs. Xeros Technology Group | Impax Environmental vs. CleanTech Lithium plc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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