Correlation Between Scandinavian Tobacco and Hudson Pacific
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Hudson Pacific 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 Hudson Pacific 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 Hudson Pacific Properties, you can compare the effects of market volatilities on Scandinavian Tobacco and Hudson Pacific 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 Hudson Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Hudson Pacific.
Diversification Opportunities for Scandinavian Tobacco and Hudson Pacific
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scandinavian and Hudson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific Properties 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 Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Hudson Pacific go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Hudson Pacific
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.4 times more return on investment than Hudson Pacific. However, Scandinavian Tobacco Group is 2.49 times less risky than Hudson Pacific. It trades about 0.03 of its potential returns per unit of risk. Hudson Pacific Properties is currently generating about -0.03 per unit of risk. If you would invest 608.00 in Scandinavian Tobacco Group on September 24, 2024 and sell it today you would earn a total of 108.00 from holding Scandinavian Tobacco Group or generate 17.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Hudson Pacific Properties
Performance |
| Timeline |
| Scandinavian Tobacco |
| Hudson Pacific Properties |
Scandinavian Tobacco and Hudson Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Hudson Pacific
The main advantage of trading using opposite Scandinavian Tobacco and Hudson Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Hudson Pacific 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 Hudson Pacific will offset losses from the drop in Hudson Pacific's long position.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
| Hudson Pacific vs. Realty Income | Hudson Pacific vs. Park Hotels Resorts | Hudson Pacific vs. Power REIT | Hudson Pacific vs. Urban Edge Properties |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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