Correlation Between Imperial Brands and Judges Scientific
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Judges Scientific 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 Judges Scientific 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 Judges Scientific Plc, you can compare the effects of market volatilities on Imperial Brands and Judges Scientific 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 Judges Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Judges Scientific.
Diversification Opportunities for Imperial Brands and Judges Scientific
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Imperial and Judges is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Judges Scientific Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Judges Scientific Plc 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 Judges Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Judges Scientific Plc has no effect on the direction of Imperial Brands i.e., Imperial Brands and Judges Scientific go up and down completely randomly.
Pair Corralation between Imperial Brands and Judges Scientific
Assuming the 90 days trading horizon Imperial Brands PLC is expected to generate 0.37 times more return on investment than Judges Scientific. However, Imperial Brands PLC is 2.68 times less risky than Judges Scientific. It trades about 0.1 of its potential returns per unit of risk. Judges Scientific Plc is currently generating about -0.48 per unit of risk. If you would invest 257,300 in Imperial Brands PLC on October 21, 2024 and sell it today you would earn a total of 2,900 from holding Imperial Brands PLC or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Brands PLC vs. Judges Scientific Plc
Performance |
| Timeline |
| Imperial Brands PLC |
| Judges Scientific Plc |
Imperial Brands and Judges Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Judges Scientific
The main advantage of trading using opposite Imperial Brands and Judges Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Judges Scientific 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 Judges Scientific will offset losses from the drop in Judges Scientific's long position.| Imperial Brands vs. McEwen Mining | Imperial Brands vs. Tata Steel Limited | Imperial Brands vs. Coeur Mining | Imperial Brands vs. Hochschild Mining plc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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