Correlation Between Fevertree Drinks and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Macmahon Holdings 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 Macmahon Holdings 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on Fevertree Drinks and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Macmahon Holdings.
Diversification Opportunities for Fevertree Drinks and Macmahon Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fevertree and Macmahon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Macmahon Holdings
Assuming the 90 days horizon Fevertree Drinks Plc is expected to generate 2.67 times more return on investment than Macmahon Holdings. However, Fevertree Drinks is 2.67 times more volatile than Macmahon Holdings Limited. It trades about 0.14 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about -0.22 per unit of risk. If you would invest 798.00 in Fevertree Drinks Plc on November 22, 2024 and sell it today you would earn a total of 113.00 from holding Fevertree Drinks Plc or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Macmahon Holdings |
Fevertree Drinks and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Macmahon Holdings
The main advantage of trading using opposite Fevertree Drinks and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Fevertree Drinks vs. National Beverage Corp | Fevertree Drinks vs. Celsius Holdings | Fevertree Drinks vs. Monster Beverage Corp | Fevertree Drinks vs. Coca Cola Femsa SAB |
| Macmahon Holdings vs. Paranovus Entertainment Technology | Macmahon Holdings vs. Willamette Valley Vineyards | Macmahon Holdings vs. China Resources Beer | Macmahon Holdings vs. Westrock Coffee |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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