Correlation Between CarsalesCom and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and IMPERIAL 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 CarsalesCom and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and IMPERIAL TOBACCO , you can compare the effects of market volatilities on CarsalesCom and IMPERIAL 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 CarsalesCom with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and IMPERIAL TOBACCO.
Diversification Opportunities for CarsalesCom and IMPERIAL TOBACCO
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CarsalesCom and IMPERIAL is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and CarsalesCom 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 CarsalesCom are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of CarsalesCom i.e., CarsalesCom and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between CarsalesCom and IMPERIAL TOBACCO
Assuming the 90 days horizon CarsalesCom is expected to under-perform the IMPERIAL TOBACCO. In addition to that, CarsalesCom is 1.32 times more volatile than IMPERIAL TOBACCO . It trades about -0.1 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.53 per unit of volatility. If you would invest 2,783 in IMPERIAL TOBACCO on September 13, 2024 and sell it today you would earn a total of 370.00 from holding IMPERIAL TOBACCO or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| CarsalesCom |
| IMPERIAL TOBACCO |
CarsalesCom and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and IMPERIAL TOBACCO
The main advantage of trading using opposite CarsalesCom and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, IMPERIAL 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| CarsalesCom vs. Tencent Holdings | CarsalesCom vs. Superior Plus Corp | CarsalesCom vs. SIVERS SEMICONDUCTORS AB | CarsalesCom vs. NorAm Drilling AS |
| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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