Correlation Between NioCorp Developments and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments 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 NioCorp Developments and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Scandinavian Tobacco Group, you can compare the effects of market volatilities on NioCorp Developments 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 NioCorp Developments with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Scandinavian Tobacco.
Diversification Opportunities for NioCorp Developments and Scandinavian Tobacco
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NioCorp and Scandinavian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and NioCorp Developments 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 NioCorp Developments Ltd 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 NioCorp Developments i.e., NioCorp Developments and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between NioCorp Developments and Scandinavian Tobacco
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Scandinavian Tobacco. In addition to that, NioCorp Developments is 2.53 times more volatile than Scandinavian Tobacco Group. It trades about -0.05 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.02 per unit of volatility. If you would invest 664.00 in Scandinavian Tobacco Group on August 31, 2024 and sell it today you would earn a total of 52.00 from holding Scandinavian Tobacco Group or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| NioCorp Developments |
| Scandinavian Tobacco |
NioCorp Developments and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Scandinavian Tobacco
The main advantage of trading using opposite NioCorp Developments and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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.| NioCorp Developments vs. FTAI Aviation Ltd | NioCorp Developments vs. United Rentals | NioCorp Developments vs. Brunswick | NioCorp Developments vs. Wabash National |
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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