Correlation Between IMPERIAL TOBACCO and MeVis Medical
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and MeVis Medical 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 MeVis Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and MeVis Medical Solutions, you can compare the effects of market volatilities on IMPERIAL TOBACCO and MeVis Medical 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 MeVis Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and MeVis Medical.
Diversification Opportunities for IMPERIAL TOBACCO and MeVis Medical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IMPERIAL and MeVis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and MeVis Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeVis Medical Solutions 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 MeVis Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeVis Medical Solutions has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and MeVis Medical go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and MeVis Medical
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 1.59 times more return on investment than MeVis Medical. However, IMPERIAL TOBACCO is 1.59 times more volatile than MeVis Medical Solutions. It trades about 0.2 of its potential returns per unit of risk. MeVis Medical Solutions is currently generating about 0.08 per unit of risk. If you would invest 3,131 in IMPERIAL TOBACCO on November 5, 2024 and sell it today you would earn a total of 100.00 from holding IMPERIAL TOBACCO or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. MeVis Medical Solutions
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| MeVis Medical Solutions |
IMPERIAL TOBACCO and MeVis Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and MeVis Medical
The main advantage of trading using opposite IMPERIAL TOBACCO and MeVis Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, MeVis Medical 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 MeVis Medical will offset losses from the drop in MeVis Medical's long position.| IMPERIAL TOBACCO vs. Marie Brizard Wine | IMPERIAL TOBACCO vs. CRISPR Therapeutics AG | IMPERIAL TOBACCO vs. Singapore Telecommunications Limited | IMPERIAL TOBACCO vs. TELECOM ITALRISP ADR10 |
| MeVis Medical vs. Richardson Electronics | MeVis Medical vs. New Residential Investment | MeVis Medical vs. Virtus Investment Partners | MeVis Medical vs. AOYAMA TRADING |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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