Correlation Between Imperial Brands and Vaporbrands Intl
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Vaporbrands Intl 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 Vaporbrands Intl 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 Vaporbrands Intl, you can compare the effects of market volatilities on Imperial Brands and Vaporbrands Intl 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 Vaporbrands Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Vaporbrands Intl.
Diversification Opportunities for Imperial Brands and Vaporbrands Intl
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Imperial and Vaporbrands is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Vaporbrands Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaporbrands Intl 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 Vaporbrands Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaporbrands Intl has no effect on the direction of Imperial Brands i.e., Imperial Brands and Vaporbrands Intl go up and down completely randomly.
Pair Corralation between Imperial Brands and Vaporbrands Intl
Assuming the 90 days horizon Imperial Brands PLC is expected to generate 0.14 times more return on investment than Vaporbrands Intl. However, Imperial Brands PLC is 7.07 times less risky than Vaporbrands Intl. It trades about 0.12 of its potential returns per unit of risk. Vaporbrands Intl is currently generating about -0.01 per unit of risk. If you would invest 1,996 in Imperial Brands PLC on September 1, 2024 and sell it today you would earn a total of 1,343 from holding Imperial Brands PLC or generate 67.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Brands PLC vs. Vaporbrands Intl
Performance |
| Timeline |
| Imperial Brands PLC |
| Vaporbrands Intl |
Imperial Brands and Vaporbrands Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Vaporbrands Intl
The main advantage of trading using opposite Imperial Brands and Vaporbrands Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Vaporbrands Intl 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 Vaporbrands Intl will offset losses from the drop in Vaporbrands Intl'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 |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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