Correlation Between Scandinavian Tobacco and Western Digital
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Western Digital 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 Western Digital 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 Western Digital, you can compare the effects of market volatilities on Scandinavian Tobacco and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Western Digital.
Diversification Opportunities for Scandinavian Tobacco and Western Digital
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Western Digital go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Western Digital
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Western Digital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.31 times less risky than Western Digital. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Western Digital is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,522 in Western Digital on September 4, 2024 and sell it today you would earn a total of 647.00 from holding Western Digital or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Western Digital
Performance |
| Timeline |
| Scandinavian Tobacco |
| Western Digital |
Scandinavian Tobacco and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Western Digital
The main advantage of trading using opposite Scandinavian Tobacco and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital'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 |
| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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