Correlation Between IMPERIAL TOBACCO and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and InPlay Oil 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 InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and InPlay Oil Corp, you can compare the effects of market volatilities on IMPERIAL TOBACCO and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and InPlay Oil.
Diversification Opportunities for IMPERIAL TOBACCO and InPlay Oil
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IMPERIAL and InPlay is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and InPlay Oil go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and InPlay Oil
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.63 times more return on investment than InPlay Oil. However, IMPERIAL TOBACCO is 1.6 times less risky than InPlay Oil. It trades about 0.15 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.49 per unit of risk. If you would invest 2,998 in IMPERIAL TOBACCO on September 24, 2024 and sell it today you would earn a total of 83.00 from holding IMPERIAL TOBACCO or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. InPlay Oil Corp
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| InPlay Oil Corp |
IMPERIAL TOBACCO and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and InPlay Oil
The main advantage of trading using opposite IMPERIAL TOBACCO and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| IMPERIAL TOBACCO vs. Tianjin Capital Environmental | IMPERIAL TOBACCO vs. CarsalesCom | IMPERIAL TOBACCO vs. Khiron Life Sciences | IMPERIAL TOBACCO vs. ALGOMA STEEL GROUP |
| InPlay Oil vs. CompuGroup Medical SE | InPlay Oil vs. IMPERIAL TOBACCO | InPlay Oil vs. Compugroup Medical SE | InPlay Oil vs. Apollo Medical 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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