Correlation Between IMPERIAL TOBACCO and Corporate Office
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Corporate Office 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 IMPERIAL TOBACCO and Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Corporate Office Properties, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Corporate Office 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 IMPERIAL TOBACCO with a short position of Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Corporate Office.
Diversification Opportunities for IMPERIAL TOBACCO and Corporate Office
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IMPERIAL and Corporate is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro and IMPERIAL 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 IMPERIAL TOBACCO are associated (or correlated) with Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Corporate Office go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Corporate Office
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.95 times more return on investment than Corporate Office. However, IMPERIAL TOBACCO is 1.06 times less risky than Corporate Office. It trades about 0.25 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.14 per unit of risk. If you would invest 2,578 in IMPERIAL TOBACCO on September 23, 2024 and sell it today you would earn a total of 503.00 from holding IMPERIAL TOBACCO or generate 19.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
IMPERIAL TOBACCO vs. Corporate Office Properties
Performance |
Timeline |
IMPERIAL TOBACCO |
Corporate Office Pro |
IMPERIAL TOBACCO and Corporate Office Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IMPERIAL TOBACCO and Corporate Office
The main advantage of trading using opposite IMPERIAL TOBACCO and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.IMPERIAL TOBACCO vs. Mitsui Chemicals | IMPERIAL TOBACCO vs. Tyson Foods | IMPERIAL TOBACCO vs. GEELY AUTOMOBILE | IMPERIAL TOBACCO vs. CN MODERN DAIRY |
Corporate Office vs. Digital Realty Trust | Corporate Office vs. Gecina SA | Corporate Office vs. Japan Real Estate | Corporate Office vs. SL Green Realty |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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