Correlation Between FIREWEED METALS and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both FIREWEED METALS and Scandinavian Tobacco 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 FIREWEED METALS and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIREWEED METALS P and Scandinavian Tobacco Group, you can compare the effects of market volatilities on FIREWEED METALS and Scandinavian Tobacco 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 FIREWEED METALS with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and Scandinavian Tobacco.
Diversification Opportunities for FIREWEED METALS and Scandinavian Tobacco
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between FIREWEED and Scandinavian is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and FIREWEED METALS 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 FIREWEED METALS P are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of FIREWEED METALS i.e., FIREWEED METALS and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between FIREWEED METALS and Scandinavian Tobacco
Assuming the 90 days horizon FIREWEED METALS P is expected to generate 1.9 times more return on investment than Scandinavian Tobacco. However, FIREWEED METALS is 1.9 times more volatile than Scandinavian Tobacco Group. It trades about 0.23 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.1 per unit of risk. If you would invest 85.00 in FIREWEED METALS P on September 20, 2024 and sell it today you would earn a total of 13.00 from holding FIREWEED METALS P or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIREWEED METALS P vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| FIREWEED METALS P |
| Scandinavian Tobacco |
FIREWEED METALS and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIREWEED METALS and Scandinavian Tobacco
The main advantage of trading using opposite FIREWEED METALS and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIREWEED METALS position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| FIREWEED METALS vs. CANON MARKETING JP | FIREWEED METALS vs. Strategic Investments AS | FIREWEED METALS vs. FLOW TRADERS LTD | FIREWEED METALS vs. Chuangs China Investments |
| Scandinavian Tobacco vs. Regions Financial | Scandinavian Tobacco vs. PT Bank Maybank | Scandinavian Tobacco vs. CHIBA BANK | Scandinavian Tobacco vs. Tradegate AG Wertpapierhandelsbank |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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