Correlation Between Broadwind and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Broadwind and ITALIAN 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 Broadwind and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Broadwind and ITALIAN 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 Broadwind with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and ITALIAN WINE.
Diversification Opportunities for Broadwind and ITALIAN WINE
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Broadwind and ITALIAN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and Broadwind 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 Broadwind are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Broadwind i.e., Broadwind and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Broadwind and ITALIAN WINE
Assuming the 90 days trading horizon Broadwind is expected to generate 6.41 times more return on investment than ITALIAN WINE. However, Broadwind is 6.41 times more volatile than ITALIAN WINE BRANDS. It trades about 0.08 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.0 per unit of risk. If you would invest 158.00 in Broadwind on September 26, 2024 and sell it today you would earn a total of 8.00 from holding Broadwind or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Broadwind vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Broadwind |
| ITALIAN WINE BRANDS |
Broadwind and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and ITALIAN WINE
The main advantage of trading using opposite Broadwind and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, ITALIAN 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Broadwind vs. SIEMENS AG SP | Broadwind vs. Siemens Aktiengesellschaft | Broadwind vs. Schneider Electric SE | Broadwind vs. Atlas Copco A |
| ITALIAN WINE vs. Diageo plc | ITALIAN WINE vs. Pernod Ricard SA | ITALIAN WINE vs. Hawesko Holding AG | ITALIAN WINE vs. ANDREW PELLER LTD |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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