Correlation Between IMPERIAL TOBACCO and Tradegate
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Tradegate 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 Tradegate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Tradegate.
Diversification Opportunities for IMPERIAL TOBACCO and Tradegate
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IMPERIAL and Tradegate is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Tradegate go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Tradegate
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 1.38 times more return on investment than Tradegate. However, IMPERIAL TOBACCO is 1.38 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about 0.23 of its potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about 0.0 per unit of risk. If you would invest 2,613 in IMPERIAL TOBACCO on September 12, 2024 and sell it today you would earn a total of 494.00 from holding IMPERIAL TOBACCO or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Tradegate AG Wertpapierhandels
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Tradegate AG Wertpap |
IMPERIAL TOBACCO and Tradegate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Tradegate
The main advantage of trading using opposite IMPERIAL TOBACCO and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate's long position.| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
| Tradegate vs. Superior Plus Corp | Tradegate vs. SIVERS SEMICONDUCTORS AB | Tradegate vs. CHINA HUARONG ENERHD 50 | Tradegate vs. NORDIC HALIBUT AS |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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