Correlation Between Imperial Brands and Swedish Match
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Swedish Match 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 Swedish Match 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 Swedish Match Ab, you can compare the effects of market volatilities on Imperial Brands and Swedish Match 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 Swedish Match. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Swedish Match.
Diversification Opportunities for Imperial Brands and Swedish Match
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Imperial and Swedish is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Swedish Match Ab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Match Ab 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 Swedish Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Match Ab has no effect on the direction of Imperial Brands i.e., Imperial Brands and Swedish Match go up and down completely randomly.
Pair Corralation between Imperial Brands and Swedish Match
If you would invest 2,983 in Imperial Brands PLC on September 2, 2024 and sell it today you would earn a total of 282.00 from holding Imperial Brands PLC or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Imperial Brands PLC vs. Swedish Match Ab
Performance |
| Timeline |
| Imperial Brands PLC |
| Swedish Match Ab |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Imperial Brands and Swedish Match Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Swedish Match
The main advantage of trading using opposite Imperial Brands and Swedish Match positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Swedish Match 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 Swedish Match will offset losses from the drop in Swedish Match's long position.| Imperial Brands vs. Signet International Holdings | Imperial Brands vs. National Beverage Corp | Imperial Brands vs. PT Astra International | Imperial Brands vs. Vita Coco |
| Swedish Match vs. Nomura Holdings ADR | Swedish Match vs. Globalfoundries | Swedish Match vs. Artisan Partners Asset | Swedish Match vs. Valens |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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