Correlation Between Impax Asset and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Impax Asset 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 Asset 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 Asset Management and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Impax Asset 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 Asset with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Asset and Scandinavian Tobacco.
Diversification Opportunities for Impax Asset and Scandinavian Tobacco
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Impax and Scandinavian is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Impax Asset Management 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 Asset 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 Asset Management 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 Asset i.e., Impax Asset and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Impax Asset and Scandinavian Tobacco
Assuming the 90 days trading horizon Impax Asset Management is expected to generate 1.2 times more return on investment than Scandinavian Tobacco. However, Impax Asset is 1.2 times more volatile than Scandinavian Tobacco Group. It trades about -0.1 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.2 per unit of risk. If you would invest 34,800 in Impax Asset Management on September 5, 2024 and sell it today you would lose (1,900) from holding Impax Asset Management or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Asset Management vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Impax Asset Management |
| Scandinavian Tobacco |
Impax Asset and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Asset and Scandinavian Tobacco
The main advantage of trading using opposite Impax Asset and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Asset 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 Asset vs. Summit Materials Cl | Impax Asset vs. Take Two Interactive Software | Impax Asset vs. Cairo Communication SpA | Impax Asset vs. Zoom Video Communications |
| Scandinavian Tobacco vs. Zurich Insurance Group | Scandinavian Tobacco vs. Herald Investment Trust | Scandinavian Tobacco vs. Kinnevik Investment AB | Scandinavian Tobacco vs. Impax Asset Management |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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