Correlation Between Fevertree Drinks and Optima Health
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Optima Health 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 Fevertree Drinks and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Optima Health plc, you can compare the effects of market volatilities on Fevertree Drinks and Optima Health 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 Fevertree Drinks with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Optima Health.
Diversification Opportunities for Fevertree Drinks and Optima Health
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fevertree and Optima is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Optima Health go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Optima Health
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 1.76 times more return on investment than Optima Health. However, Fevertree Drinks is 1.76 times more volatile than Optima Health plc. It trades about -0.03 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.05 per unit of risk. If you would invest 104,835 in Fevertree Drinks Plc on September 25, 2024 and sell it today you would lose (38,235) from holding Fevertree Drinks Plc or give up 36.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.6% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Optima Health plc
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Optima Health plc |
Fevertree Drinks and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Optima Health
The main advantage of trading using opposite Fevertree Drinks and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Fevertree Drinks vs. Berkshire Hathaway | Fevertree Drinks vs. Hyundai Motor | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Samsung Electronics Co |
| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Freeport McMoRan |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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