Correlation Between Wise Plc and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Wise Plc 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 Wise Plc and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wise plc and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Wise Plc 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 Wise Plc with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wise Plc and Scandinavian Tobacco.
Diversification Opportunities for Wise Plc and Scandinavian Tobacco
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wise and Scandinavian is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wise plc and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Wise Plc 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 Wise plc 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 Wise Plc i.e., Wise Plc and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Wise Plc and Scandinavian Tobacco
Assuming the 90 days trading horizon Wise plc is expected to generate 1.55 times more return on investment than Scandinavian Tobacco. However, Wise Plc is 1.55 times more volatile than Scandinavian Tobacco Group. It trades about 0.07 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.0 per unit of risk. If you would invest 52,740 in Wise plc on October 13, 2024 and sell it today you would earn a total of 55,660 from holding Wise plc or generate 105.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Wise plc vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Wise plc |
| Scandinavian Tobacco |
Wise Plc and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wise Plc and Scandinavian Tobacco
The main advantage of trading using opposite Wise Plc and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wise Plc 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.| Wise Plc vs. Scandinavian Tobacco Group | Wise Plc vs. Taiwan Semiconductor Manufacturing | Wise Plc vs. Inspiration Healthcare Group | Wise Plc vs. Compagnie Plastic Omnium |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |