Correlation Between Vita Coco and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both Vita Coco and Imperial Brands 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 Vita Coco and Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Imperial Brands PLC, you can compare the effects of market volatilities on Vita Coco and Imperial Brands 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 Vita Coco with a short position of Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Imperial Brands.
Diversification Opportunities for Vita Coco and Imperial Brands
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vita and Imperial is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC and Vita Coco 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 Vita Coco are associated (or correlated) with Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of Vita Coco i.e., Vita Coco and Imperial Brands go up and down completely randomly.
Pair Corralation between Vita Coco and Imperial Brands
Given the investment horizon of 90 days Vita Coco is expected to generate 2.44 times more return on investment than Imperial Brands. However, Vita Coco is 2.44 times more volatile than Imperial Brands PLC. It trades about 0.32 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.43 per unit of risk. If you would invest 2,961 in Vita Coco on September 1, 2024 and sell it today you would earn a total of 593.00 from holding Vita Coco or generate 20.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. Imperial Brands PLC
Performance |
| Timeline |
| Vita Coco |
| Imperial Brands PLC |
Vita Coco and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and Imperial Brands
The main advantage of trading using opposite Vita Coco and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. National Beverage Corp | Vita Coco vs. Embotelladora Andina SA |
| Imperial Brands vs. Signet International Holdings | Imperial Brands vs. National Beverage Corp | Imperial Brands vs. PT Astra International | Imperial Brands vs. Vita Coco |
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.
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