Correlation Between Scandinavian Tobacco and Albertsons Companies
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Albertsons Companies 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 Scandinavian Tobacco and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Albertsons Companies, you can compare the effects of market volatilities on Scandinavian Tobacco and Albertsons Companies 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 Scandinavian Tobacco with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Albertsons Companies.
Diversification Opportunities for Scandinavian Tobacco and Albertsons Companies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandinavian and Albertsons is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Albertsons Companies go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Albertsons Companies
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.15 times more return on investment than Albertsons Companies. However, Scandinavian Tobacco is 1.15 times more volatile than Albertsons Companies. It trades about -0.02 of its potential returns per unit of risk. Albertsons Companies is currently generating about -0.04 per unit of risk. If you would invest 777.00 in Scandinavian Tobacco Group on September 14, 2024 and sell it today you would lose (61.00) from holding Scandinavian Tobacco Group or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Albertsons Companies
Performance |
| Timeline |
| Scandinavian Tobacco |
| Albertsons Companies |
Scandinavian Tobacco and Albertsons Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Albertsons Companies
The main advantage of trading using opposite Scandinavian Tobacco and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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