Correlation Between IMPERIAL TOBACCO and Poste Italiane

Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Poste Italiane 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 Poste Italiane into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IMPERIAL TOBACCO and Poste Italiane SpA, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Poste Italiane 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 Poste Italiane. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Poste Italiane.

Diversification Opportunities for IMPERIAL TOBACCO and Poste Italiane

-0.33

Correlation Coefficient

IMPERIAL TOBACCO  Poste Italiane

Very good diversification

The 3 months correlation between IMPERIAL and Poste is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA 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 Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Poste Italiane go up and down completely randomly.

Pair Corralation between IMPERIAL TOBACCO and Poste Italiane

Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to under-perform the Poste Italiane. In addition to that, IMPERIAL TOBACCO is 1.73 times more volatile than Poste Italiane SpA. It trades about -0.01 of its total potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.17 per unit of volatility. If you would invest  1,649  in Poste Italiane SpA on April 22, 2025 and sell it today you would earn a total of  143.00  from holding Poste Italiane SpA or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IMPERIAL TOBACCO   vs.  Poste Italiane SpA

IMPERIAL TOBACCO

Risk-Adjusted Performance

Very Weak

Over the last 90 days IMPERIAL TOBACCO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, IMPERIAL TOBACCO is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Poste Italiane SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Poste Italiane may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IMPERIAL TOBACCO and Poste Italiane

The main advantage of trading using opposite IMPERIAL TOBACCO and Poste Italiane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Poste Italiane 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 Poste Italiane will offset losses from the drop in Poste Italiane's long position.

The idea behind IMPERIAL TOBACCO and Poste Italiane SpA 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.