Correlation Between Mulberry Group and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Mulberry Group 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 Mulberry Group and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mulberry Group PLC and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Mulberry Group 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 Mulberry Group with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mulberry Group and Scandinavian Tobacco.
Diversification Opportunities for Mulberry Group and Scandinavian Tobacco
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mulberry and Scandinavian is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Mulberry Group 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 Mulberry Group PLC 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 Mulberry Group i.e., Mulberry Group and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Mulberry Group and Scandinavian Tobacco
Assuming the 90 days trading horizon Mulberry Group PLC is expected to under-perform the Scandinavian Tobacco. In addition to that, Mulberry Group is 2.13 times more volatile than Scandinavian Tobacco Group. It trades about -0.1 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.13 per unit of volatility. If you would invest 10,255 in Scandinavian Tobacco Group on September 1, 2024 and sell it today you would lose (595.00) from holding Scandinavian Tobacco Group or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mulberry Group PLC vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Mulberry Group PLC |
| Scandinavian Tobacco |
Mulberry Group and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mulberry Group and Scandinavian Tobacco
The main advantage of trading using opposite Mulberry Group and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mulberry Group 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.| Mulberry Group vs. Auto Trader Group | Mulberry Group vs. Diversified Energy | Mulberry Group vs. Air Products Chemicals | Mulberry Group vs. Lowland Investment Co |
| Scandinavian Tobacco vs. Uniper SE | Scandinavian Tobacco vs. Mulberry Group PLC | Scandinavian Tobacco vs. London Security Plc | Scandinavian Tobacco vs. Triad Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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