Correlation Between Scandinavian Tobacco and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Scandinavian Tobacco and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Sealed Air.
Diversification Opportunities for Scandinavian Tobacco and Sealed Air
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scandinavian and Sealed is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Sealed Air go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Sealed Air
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Sealed Air. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.25 times less risky than Sealed Air. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Sealed Air is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,618 in Sealed Air on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Sealed Air or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Sealed Air
Performance |
| Timeline |
| Scandinavian Tobacco |
| Sealed Air |
Scandinavian Tobacco and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Sealed Air
The main advantage of trading using opposite Scandinavian Tobacco and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air'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 |
| Sealed Air vs. Packaging Corp of | Sealed Air vs. O I Glass | Sealed Air vs. Silgan Holdings | Sealed Air vs. International Paper |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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