Correlation Between Fevertree Drinks and Stepan
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Fevertree Drinks and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Stepan.
Diversification Opportunities for Fevertree Drinks and Stepan
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fevertree and Stepan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Stepan go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Stepan
Assuming the 90 days horizon Fevertree Drinks Plc is expected to generate 2.17 times more return on investment than Stepan. However, Fevertree Drinks is 2.17 times more volatile than Stepan Company. It trades about 0.12 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 779.00 in Fevertree Drinks Plc on December 11, 2024 and sell it today you would earn a total of 148.00 from holding Fevertree Drinks Plc or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Stepan Company
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Stepan Company |
Fevertree Drinks and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Stepan
The main advantage of trading using opposite Fevertree Drinks and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's 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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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