Correlation Between IMPERIAL TOBACCO and RTL GROUP
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and RTL GROUP 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 RTL GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and RTL GROUP UNSPADR, you can compare the effects of market volatilities on IMPERIAL TOBACCO and RTL GROUP 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 RTL GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and RTL GROUP.
Diversification Opportunities for IMPERIAL TOBACCO and RTL GROUP
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IMPERIAL and RTL is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR 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 RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and RTL GROUP go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and RTL GROUP
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.34 times more return on investment than RTL GROUP. However, IMPERIAL TOBACCO is 2.93 times less risky than RTL GROUP. It trades about 0.49 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about -0.2 per unit of risk. If you would invest 2,708 in IMPERIAL TOBACCO on September 1, 2024 and sell it today you would earn a total of 371.00 from holding IMPERIAL TOBACCO or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. RTL GROUP UNSPADR
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| RTL GROUP UNSPADR |
IMPERIAL TOBACCO and RTL GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and RTL GROUP
The main advantage of trading using opposite IMPERIAL TOBACCO and RTL GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, RTL GROUP 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 RTL GROUP will offset losses from the drop in RTL GROUP's long position.| IMPERIAL TOBACCO vs. INDOFOOD AGRI RES | IMPERIAL TOBACCO vs. AUSTEVOLL SEAFOOD | IMPERIAL TOBACCO vs. CAL MAINE FOODS | IMPERIAL TOBACCO vs. SALESFORCE INC CDR |
| RTL GROUP vs. WIZZ AIR HLDGUNSPADR4 | RTL GROUP vs. Taiwan Semiconductor Manufacturing | RTL GROUP vs. GEAR4MUSIC LS 10 | RTL GROUP vs. Ryanair Holdings plc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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