Correlation Between Imperial Brands and Dentsply Sirona
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Dentsply Sirona 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 Imperial Brands and Dentsply Sirona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Brands PLC and Dentsply Sirona, you can compare the effects of market volatilities on Imperial Brands and Dentsply Sirona 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 Imperial Brands with a short position of Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Dentsply Sirona.
Diversification Opportunities for Imperial Brands and Dentsply Sirona
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Imperial and Dentsply is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Imperial Brands i.e., Imperial Brands and Dentsply Sirona go up and down completely randomly.
Pair Corralation between Imperial Brands and Dentsply Sirona
Assuming the 90 days trading horizon Imperial Brands PLC is expected to generate 0.28 times more return on investment than Dentsply Sirona. However, Imperial Brands PLC is 3.62 times less risky than Dentsply Sirona. It trades about 0.26 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.08 per unit of risk. If you would invest 213,903 in Imperial Brands PLC on September 2, 2024 and sell it today you would earn a total of 42,997 from holding Imperial Brands PLC or generate 20.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Imperial Brands PLC vs. Dentsply Sirona
Performance |
| Timeline |
| Imperial Brands PLC |
| Dentsply Sirona |
Imperial Brands and Dentsply Sirona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Dentsply Sirona
The main advantage of trading using opposite Imperial Brands and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona's long position.| Imperial Brands vs. Dentsply Sirona | Imperial Brands vs. Impax Environmental Markets | Imperial Brands vs. Induction Healthcare Group | Imperial Brands vs. JLEN Environmental Assets |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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