Correlation Between Universal and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Universal and Scandinavian Tobacco 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 Universal and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Universal 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 Universal with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Scandinavian Tobacco.
Diversification Opportunities for Universal and Scandinavian Tobacco
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Scandinavian is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Universal 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 Universal 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 Universal i.e., Universal and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Universal and Scandinavian Tobacco
Considering the 90-day investment horizon Universal is expected to generate 1.18 times more return on investment than Scandinavian Tobacco. However, Universal is 1.18 times more volatile than Scandinavian Tobacco Group. It trades about 0.5 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.29 per unit of risk. If you would invest 5,005 in Universal on August 28, 2024 and sell it today you would earn a total of 794.00 from holding Universal or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Universal |
| Scandinavian Tobacco |
Universal and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Scandinavian Tobacco
The main advantage of trading using opposite Universal and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |