Correlation Between MOUNT GIBSON and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both MOUNT GIBSON and ITALIAN WINE 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 MOUNT GIBSON and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOUNT GIBSON IRON and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on MOUNT GIBSON and ITALIAN WINE 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 MOUNT GIBSON with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOUNT GIBSON and ITALIAN WINE.
Diversification Opportunities for MOUNT GIBSON and ITALIAN WINE
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOUNT and ITALIAN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding MOUNT GIBSON IRON and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and MOUNT GIBSON 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 MOUNT GIBSON IRON are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of MOUNT GIBSON i.e., MOUNT GIBSON and ITALIAN WINE go up and down completely randomly.
Pair Corralation between MOUNT GIBSON and ITALIAN WINE
Assuming the 90 days trading horizon MOUNT GIBSON IRON is expected to under-perform the ITALIAN WINE. In addition to that, MOUNT GIBSON is 1.52 times more volatile than ITALIAN WINE BRANDS. It trades about -0.02 of its total potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.01 per unit of volatility. If you would invest 2,006 in ITALIAN WINE BRANDS on December 12, 2024 and sell it today you would earn a total of 24.00 from holding ITALIAN WINE BRANDS or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOUNT GIBSON IRON vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| MOUNT GIBSON IRON |
| ITALIAN WINE BRANDS |
MOUNT GIBSON and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOUNT GIBSON and ITALIAN WINE
The main advantage of trading using opposite MOUNT GIBSON and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOUNT GIBSON position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| MOUNT GIBSON vs. 24SEVENOFFICE GROUP AB | ||
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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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