Correlation Between Brown Forman and Remy Cointreau
Can any of the company-specific risk be diversified away by investing in both Brown Forman and Remy Cointreau 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 Brown Forman and Remy Cointreau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Forman and Remy Cointreau SA, you can compare the effects of market volatilities on Brown Forman and Remy Cointreau 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 Brown Forman with a short position of Remy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and Remy Cointreau.
Diversification Opportunities for Brown Forman and Remy Cointreau
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brown and Remy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA and Brown Forman 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 Brown Forman are associated (or correlated) with Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of Brown Forman i.e., Brown Forman and Remy Cointreau go up and down completely randomly.
Pair Corralation between Brown Forman and Remy Cointreau
Given the investment horizon of 90 days Brown Forman is expected to generate 0.71 times more return on investment than Remy Cointreau. However, Brown Forman is 1.42 times less risky than Remy Cointreau. It trades about -0.12 of its potential returns per unit of risk. Remy Cointreau SA is currently generating about -0.09 per unit of risk. If you would invest 5,571 in Brown Forman on November 9, 2024 and sell it today you would lose (2,429) from holding Brown Forman or give up 43.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Forman vs. Remy Cointreau SA
Performance |
| Timeline |
| Brown Forman |
| Remy Cointreau SA |
Brown Forman and Remy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Forman and Remy Cointreau
The main advantage of trading using opposite Brown Forman and Remy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Forman position performs unexpectedly, Remy Cointreau 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 Remy Cointreau will offset losses from the drop in Remy Cointreau's long position.| Brown Forman vs. MGP Ingredients | Brown Forman vs. Diageo PLC ADR | Brown Forman vs. Constellation Brands Class | Brown Forman vs. Pernod Ricard SA |
| Remy Cointreau vs. Diageo PLC ADR | Remy Cointreau vs. Pernod Ricard SA | Remy Cointreau vs. Treasury Wine Estates | Remy Cointreau vs. MGP Ingredients |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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