Correlation Between Stewart Information and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Stewart Information 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 Stewart Information and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stewart Information Services and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Stewart Information 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 Stewart Information with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and IMPERIAL TOBACCO.
Diversification Opportunities for Stewart Information and IMPERIAL TOBACCO
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stewart and IMPERIAL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Stewart Information 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 Stewart Information Services 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 Stewart Information i.e., Stewart Information and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Stewart Information and IMPERIAL TOBACCO
Assuming the 90 days horizon Stewart Information is expected to generate 1.23 times less return on investment than IMPERIAL TOBACCO. In addition to that, Stewart Information is 1.59 times more volatile than IMPERIAL TOBACCO . It trades about 0.18 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.34 per unit of volatility. If you would invest 2,772 in IMPERIAL TOBACCO on August 27, 2024 and sell it today you would earn a total of 252.00 from holding IMPERIAL TOBACCO or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stewart Information Services vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Stewart Information |
| IMPERIAL TOBACCO |
Stewart Information and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stewart Information and IMPERIAL TOBACCO
The main advantage of trading using opposite Stewart Information and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stewart Information 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.| Stewart Information vs. Insurance Australia Group | Stewart Information vs. Superior Plus Corp | Stewart Information vs. NMI Holdings | Stewart Information vs. Origin Agritech |
| IMPERIAL TOBACCO vs. Pure Storage | IMPERIAL TOBACCO vs. Stewart Information Services | IMPERIAL TOBACCO vs. CVS Health | IMPERIAL TOBACCO vs. National Health Investors |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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