Correlation Between PVH Corp and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both PVH Corp and IMPERIAL 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 PVH Corp and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PVH Corp and IMPERIAL TOBACCO , you can compare the effects of market volatilities on PVH Corp and IMPERIAL 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 PVH Corp with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of PVH Corp and IMPERIAL TOBACCO.
Diversification Opportunities for PVH Corp and IMPERIAL TOBACCO
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PVH and IMPERIAL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PVH Corp and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and PVH Corp 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 PVH Corp are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of PVH Corp i.e., PVH Corp and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between PVH Corp and IMPERIAL TOBACCO
Assuming the 90 days trading horizon PVH Corp is expected to generate 1.44 times less return on investment than IMPERIAL TOBACCO. In addition to that, PVH Corp is 1.92 times more volatile than IMPERIAL TOBACCO . It trades about 0.03 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.08 per unit of volatility. If you would invest 2,029 in IMPERIAL TOBACCO on October 16, 2024 and sell it today you would earn a total of 1,030 from holding IMPERIAL TOBACCO or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PVH Corp vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| PVH Corp |
| IMPERIAL TOBACCO |
PVH Corp and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PVH Corp and IMPERIAL TOBACCO
The main advantage of trading using opposite PVH Corp and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PVH Corp position performs unexpectedly, IMPERIAL 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| PVH Corp vs. American Homes 4 | PVH Corp vs. Haverty Furniture Companies | PVH Corp vs. De Grey Mining | PVH Corp vs. Aya Gold Silver |
| IMPERIAL TOBACCO vs. Direct Line Insurance | IMPERIAL TOBACCO vs. G III Apparel Group | IMPERIAL TOBACCO vs. De Grey Mining | IMPERIAL TOBACCO vs. PNC Financial Services |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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