Correlation Between IMPERIAL TOBACCO and Talanx AG
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Talanx AG 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 Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Talanx AG, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Talanx AG.
Diversification Opportunities for IMPERIAL TOBACCO and Talanx AG
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between IMPERIAL and Talanx is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Talanx AG go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Talanx AG
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 1.12 times less return on investment than Talanx AG. But when comparing it to its historical volatility, IMPERIAL TOBACCO is 1.07 times less risky than Talanx AG. It trades about 0.34 of its potential returns per unit of risk. Talanx AG is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 7,140 in Talanx AG on August 27, 2024 and sell it today you would earn a total of 730.00 from holding Talanx AG or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Talanx AG
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Talanx AG |
IMPERIAL TOBACCO and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Talanx AG
The main advantage of trading using opposite IMPERIAL TOBACCO and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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