Correlation Between Crimson Wine and Brown Forman
Can any of the company-specific risk be diversified away by investing in both Crimson Wine and Brown Forman 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 Crimson Wine and Brown Forman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crimson Wine and Brown Forman, you can compare the effects of market volatilities on Crimson Wine and Brown Forman 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 Crimson Wine with a short position of Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Brown Forman.
Diversification Opportunities for Crimson Wine and Brown Forman
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Crimson and Brown is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Brown Forman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman and Crimson Wine 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 Crimson Wine are associated (or correlated) with Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of Crimson Wine i.e., Crimson Wine and Brown Forman go up and down completely randomly.
Pair Corralation between Crimson Wine and Brown Forman
Given the investment horizon of 90 days Crimson Wine is expected to generate 1.18 times more return on investment than Brown Forman. However, Crimson Wine is 1.18 times more volatile than Brown Forman. It trades about 0.02 of its potential returns per unit of risk. Brown Forman is currently generating about -0.06 per unit of risk. If you would invest 581.00 in Crimson Wine on August 28, 2024 and sell it today you would earn a total of 74.00 from holding Crimson Wine or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crimson Wine vs. Brown Forman
Performance |
| Timeline |
| Crimson Wine |
| Brown Forman |
Crimson Wine and Brown Forman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crimson Wine and Brown Forman
The main advantage of trading using opposite Crimson Wine and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.| Crimson Wine vs. Embotelladora Andina SA | Crimson Wine vs. Signet International Holdings | Crimson Wine vs. National Beverage Corp | Crimson Wine vs. PT Astra International |
| Brown Forman vs. MGP Ingredients | Brown Forman vs. Diageo PLC ADR | Brown Forman vs. Constellation Brands Class | Brown Forman vs. Duckhorn Portfolio |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |