Correlation Between Diageo PLC and Rmy Cointreau
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Rmy 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 Diageo PLC and Rmy Cointreau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Rmy Cointreau SA, you can compare the effects of market volatilities on Diageo PLC and Rmy 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 Diageo PLC with a short position of Rmy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Rmy Cointreau.
Diversification Opportunities for Diageo PLC and Rmy Cointreau
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diageo and Rmy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of Diageo PLC i.e., Diageo PLC and Rmy Cointreau go up and down completely randomly.
Pair Corralation between Diageo PLC and Rmy Cointreau
Considering the 90-day investment horizon Diageo PLC is expected to generate 2.15 times less return on investment than Rmy Cointreau. But when comparing it to its historical volatility, Diageo PLC ADR is 1.76 times less risky than Rmy Cointreau. It trades about 0.21 of its potential returns per unit of risk. Rmy Cointreau SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,869 in Rmy Cointreau SA on September 13, 2024 and sell it today you would earn a total of 793.00 from holding Rmy Cointreau SA or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Diageo PLC ADR vs. Rmy Cointreau SA
Performance |
| Timeline |
| Diageo PLC ADR |
| Rmy Cointreau SA |
Diageo PLC and Rmy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Rmy Cointreau
The main advantage of trading using opposite Diageo PLC and Rmy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Rmy 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 Rmy Cointreau will offset losses from the drop in Rmy Cointreau's long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman |
| Rmy Cointreau vs. Remy Cointreau SA | Rmy Cointreau vs. Pernod Ricard SA | Rmy Cointreau vs. Carlsberg AS | Rmy Cointreau vs. Heineken Holding NV |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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