Correlation Between VIRGIN WINES and GEAR4MUSIC (HLDGS)
Can any of the company-specific risk be diversified away by investing in both VIRGIN WINES and GEAR4MUSIC (HLDGS) 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 VIRGIN WINES and GEAR4MUSIC (HLDGS) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIRGIN WINES UK and GEAR4MUSIC LS 10, you can compare the effects of market volatilities on VIRGIN WINES and GEAR4MUSIC (HLDGS) 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 VIRGIN WINES with a short position of GEAR4MUSIC (HLDGS). Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRGIN WINES and GEAR4MUSIC (HLDGS).
Diversification Opportunities for VIRGIN WINES and GEAR4MUSIC (HLDGS)
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VIRGIN and GEAR4MUSIC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding VIRGIN WINES UK and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC (HLDGS) and VIRGIN WINES 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 VIRGIN WINES UK are associated (or correlated) with GEAR4MUSIC (HLDGS). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC (HLDGS) has no effect on the direction of VIRGIN WINES i.e., VIRGIN WINES and GEAR4MUSIC (HLDGS) go up and down completely randomly.
Pair Corralation between VIRGIN WINES and GEAR4MUSIC (HLDGS)
Assuming the 90 days horizon VIRGIN WINES UK is expected to under-perform the GEAR4MUSIC (HLDGS). But the stock apears to be less risky and, when comparing its historical volatility, VIRGIN WINES UK is 1.15 times less risky than GEAR4MUSIC (HLDGS). The stock trades about -0.05 of its potential returns per unit of risk. The GEAR4MUSIC LS 10 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 101.00 in GEAR4MUSIC LS 10 on December 5, 2024 and sell it today you would earn a total of 68.00 from holding GEAR4MUSIC LS 10 or generate 67.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIRGIN WINES UK vs. GEAR4MUSIC LS 10
Performance |
| Timeline |
| VIRGIN WINES UK |
| GEAR4MUSIC (HLDGS) |
VIRGIN WINES and GEAR4MUSIC (HLDGS) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIRGIN WINES and GEAR4MUSIC (HLDGS)
The main advantage of trading using opposite VIRGIN WINES and GEAR4MUSIC (HLDGS) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRGIN WINES position performs unexpectedly, GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) will offset losses from the drop in GEAR4MUSIC (HLDGS)'s long position.| VIRGIN WINES vs. NORWEGIAN AIR SHUT | VIRGIN WINES vs. Delta Air Lines | VIRGIN WINES vs. LG Display Co | VIRGIN WINES vs. UNIVERSAL DISPLAY |
| GEAR4MUSIC (HLDGS) vs. Retail Estates NV | GEAR4MUSIC (HLDGS) vs. Scientific Games | GEAR4MUSIC (HLDGS) vs. Corsair Gaming | GEAR4MUSIC (HLDGS) vs. JIAHUA STORES |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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