Correlation Between Safety Insurance and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and IMPERIAL TOBACCO.
Diversification Opportunities for Safety Insurance and IMPERIAL TOBACCO
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Safety and IMPERIAL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Safety Insurance and IMPERIAL TOBACCO
Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the IMPERIAL TOBACCO. In addition to that, Safety Insurance is 1.9 times more volatile than IMPERIAL TOBACCO . It trades about -0.23 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.2 per unit of volatility. If you would invest 3,077 in IMPERIAL TOBACCO on October 30, 2024 and sell it today you would earn a total of 91.00 from holding IMPERIAL TOBACCO or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Safety Insurance |
| IMPERIAL TOBACCO |
Safety Insurance and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and IMPERIAL TOBACCO
The main advantage of trading using opposite Safety Insurance and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.| Safety Insurance vs. PICC Property and | Safety Insurance vs. Fairfax Financial Holdings | Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Insurance Australia Group |
| IMPERIAL TOBACCO vs. Clean Energy Fuels | IMPERIAL TOBACCO vs. BII Railway Transportation | IMPERIAL TOBACCO vs. SALESFORCE INC CDR | IMPERIAL TOBACCO vs. Broadridge Financial Solutions |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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