Correlation Between Food Life and VIVA WINE
Can any of the company-specific risk be diversified away by investing in both Food Life and VIVA WINE 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 Food Life and VIVA WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and VIVA WINE GROUP, you can compare the effects of market volatilities on Food Life and VIVA WINE 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 Food Life with a short position of VIVA WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and VIVA WINE.
Diversification Opportunities for Food Life and VIVA WINE
Pay attention - limited upside
The 3 months correlation between Food and VIVA is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP and Food Life 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 Food Life Companies are associated (or correlated) with VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of Food Life i.e., Food Life and VIVA WINE go up and down completely randomly.
Pair Corralation between Food Life and VIVA WINE
Assuming the 90 days horizon Food Life is expected to generate 3.63 times less return on investment than VIVA WINE. But when comparing it to its historical volatility, Food Life Companies is 2.2 times less risky than VIVA WINE. It trades about 0.04 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 168.00 in VIVA WINE GROUP on September 3, 2024 and sell it today you would earn a total of 172.00 from holding VIVA WINE GROUP or generate 102.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. VIVA WINE GROUP
Performance |
| Timeline |
| Food Life Companies |
| VIVA WINE GROUP |
Food Life and VIVA WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and VIVA WINE
The main advantage of trading using opposite Food Life and VIVA WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, VIVA WINE 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 VIVA WINE will offset losses from the drop in VIVA WINE's long position.| Food Life vs. McDonalds | Food Life vs. Chipotle Mexican Grill | Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Transaction History View history of all your transactions and understand their impact on performance |