Correlation Between VULCAN and Scandinavian Tobacco
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By analyzing existing cross correlation between VULCAN MATLS 47 and Scandinavian Tobacco Group, you can compare the effects of market volatilities on VULCAN and Scandinavian 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 VULCAN with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN and Scandinavian Tobacco.
Diversification Opportunities for VULCAN and Scandinavian Tobacco
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between VULCAN and Scandinavian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATLS 47 and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and VULCAN 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 VULCAN MATLS 47 are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of VULCAN i.e., VULCAN and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between VULCAN and Scandinavian Tobacco
Assuming the 90 days trading horizon VULCAN MATLS 47 is expected to generate 135.0 times more return on investment than Scandinavian Tobacco. However, VULCAN is 135.0 times more volatile than Scandinavian Tobacco Group. It trades about 0.12 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.04 per unit of risk. If you would invest 8,626 in VULCAN MATLS 47 on September 3, 2024 and sell it today you would earn a total of 204.00 from holding VULCAN MATLS 47 or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 40.82% |
| Values | Daily Returns |
VULCAN MATLS 47 vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| VULCAN MATLS 47 |
| Scandinavian Tobacco |
VULCAN and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN and Scandinavian Tobacco
The main advantage of trading using opposite VULCAN and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN position performs unexpectedly, Scandinavian 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.The idea behind VULCAN MATLS 47 and Scandinavian Tobacco Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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