Correlation Between IMPERIAL TOBACCO and Global Ship
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Global Ship 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 TOBACCO and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Global Ship Lease, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Global Ship 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 TOBACCO with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Global Ship.
Diversification Opportunities for IMPERIAL TOBACCO and Global Ship
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and Global is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and IMPERIAL TOBACCO 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 TOBACCO are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Global Ship go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Global Ship
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.6 times more return on investment than Global Ship. However, IMPERIAL TOBACCO is 1.66 times less risky than Global Ship. It trades about 0.16 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.07 per unit of risk. If you would invest 2,002 in IMPERIAL TOBACCO on September 3, 2024 and sell it today you would earn a total of 1,095 from holding IMPERIAL TOBACCO or generate 54.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Global Ship Lease
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Global Ship Lease |
IMPERIAL TOBACCO and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Global Ship
The main advantage of trading using opposite IMPERIAL TOBACCO and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| IMPERIAL TOBACCO vs. Gamma Communications plc | IMPERIAL TOBACCO vs. WisdomTree Investments | IMPERIAL TOBACCO vs. Strategic Investments AS | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
| Global Ship vs. BW LPG Limited | Global Ship vs. Wilh Wilhelmsen Holding | Global Ship vs. Superior Plus Corp | Global Ship vs. NMI Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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