Correlation Between IMPERIAL TOBACCO and SIRIUS XM
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and SIRIUS XM 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 SIRIUS XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and SIRIUS XM RADIO, you can compare the effects of market volatilities on IMPERIAL TOBACCO and SIRIUS XM 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 SIRIUS XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and SIRIUS XM.
Diversification Opportunities for IMPERIAL TOBACCO and SIRIUS XM
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and SIRIUS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and SIRIUS XM RADIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIRIUS XM RADIO 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 SIRIUS XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIRIUS XM RADIO has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and SIRIUS XM go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and SIRIUS XM
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.35 times more return on investment than SIRIUS XM. However, IMPERIAL TOBACCO is 2.89 times less risky than SIRIUS XM. It trades about 0.08 of its potential returns per unit of risk. SIRIUS XM RADIO is currently generating about -0.02 per unit of risk. If you would invest 2,047 in IMPERIAL TOBACCO on August 27, 2024 and sell it today you would earn a total of 977.00 from holding IMPERIAL TOBACCO or generate 47.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. SIRIUS XM RADIO
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| SIRIUS XM RADIO |
IMPERIAL TOBACCO and SIRIUS XM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and SIRIUS XM
The main advantage of trading using opposite IMPERIAL TOBACCO and SIRIUS XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, SIRIUS XM 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 SIRIUS XM will offset losses from the drop in SIRIUS XM's long position.| IMPERIAL TOBACCO vs. Pure Storage | IMPERIAL TOBACCO vs. Stewart Information Services | IMPERIAL TOBACCO vs. CVS Health | IMPERIAL TOBACCO vs. National Health Investors |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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