Correlation Between SEALED AIR and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Scandinavian Tobacco Group, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Scandinavian Tobacco.
Diversification Opportunities for SEALED AIR and Scandinavian Tobacco
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEALED and Scandinavian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between SEALED AIR and Scandinavian Tobacco
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the Scandinavian Tobacco. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 2.76 times less risky than Scandinavian Tobacco. The stock trades about -0.02 of its potential returns per unit of risk. The Scandinavian Tobacco Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 435.00 in Scandinavian Tobacco Group on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Scandinavian Tobacco Group or generate 192.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| SEALED AIR |
| Scandinavian Tobacco |
SEALED AIR and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Scandinavian Tobacco
The main advantage of trading using opposite SEALED AIR and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.| SEALED AIR vs. KIMBALL ELECTRONICS | SEALED AIR vs. SMA Solar Technology | SEALED AIR vs. Align Technology | SEALED AIR vs. Vishay Intertechnology |
| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Japan Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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