Correlation Between Bloomsbury Publishing and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing and Virgin Wines 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 Bloomsbury Publishing and Virgin Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and Virgin Wines UK, you can compare the effects of market volatilities on Bloomsbury Publishing and Virgin Wines 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 Bloomsbury Publishing with a short position of Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Virgin Wines.
Diversification Opportunities for Bloomsbury Publishing and Virgin Wines
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bloomsbury and Virgin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and Virgin Wines go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and Virgin Wines
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to generate 0.73 times more return on investment than Virgin Wines. However, Bloomsbury Publishing Plc is 1.38 times less risky than Virgin Wines. It trades about 0.05 of its potential returns per unit of risk. Virgin Wines UK is currently generating about -0.04 per unit of risk. If you would invest 44,328 in Bloomsbury Publishing Plc on August 28, 2024 and sell it today you would earn a total of 22,872 from holding Bloomsbury Publishing Plc or generate 51.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomsbury Publishing Plc vs. Virgin Wines UK
Performance |
| Timeline |
| Bloomsbury Publishing Plc |
| Virgin Wines UK |
Bloomsbury Publishing and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomsbury Publishing and Virgin Wines
The main advantage of trading using opposite Bloomsbury Publishing and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| Bloomsbury Publishing vs. National Beverage Corp | Bloomsbury Publishing vs. MoneysupermarketCom Group PLC | Bloomsbury Publishing vs. Ebro Foods | Bloomsbury Publishing vs. Universal Music Group |
| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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