Correlation Between Innovation Beverage and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both Innovation Beverage and MGP Ingredients 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 Innovation Beverage and MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovation Beverage Group and MGP Ingredients, you can compare the effects of market volatilities on Innovation Beverage and MGP Ingredients 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 Innovation Beverage with a short position of MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovation Beverage and MGP Ingredients.
Diversification Opportunities for Innovation Beverage and MGP Ingredients
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innovation and MGP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Innovation Beverage Group and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and Innovation Beverage 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 Innovation Beverage Group are associated (or correlated) with MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of Innovation Beverage i.e., Innovation Beverage and MGP Ingredients go up and down completely randomly.
Pair Corralation between Innovation Beverage and MGP Ingredients
Considering the 90-day investment horizon Innovation Beverage Group is expected to under-perform the MGP Ingredients. In addition to that, Innovation Beverage is 4.65 times more volatile than MGP Ingredients. It trades about -0.11 of its total potential returns per unit of risk. MGP Ingredients is currently generating about -0.08 per unit of volatility. If you would invest 9,457 in MGP Ingredients on August 25, 2024 and sell it today you would lose (4,782) from holding MGP Ingredients or give up 50.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 15.93% |
| Values | Daily Returns |
Innovation Beverage Group vs. MGP Ingredients
Performance |
| Timeline |
| Innovation Beverage |
| MGP Ingredients |
Innovation Beverage and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovation Beverage and MGP Ingredients
The main advantage of trading using opposite Innovation Beverage and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovation Beverage position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.| Innovation Beverage vs. Fresh Grapes LLC | Innovation Beverage vs. Eastside Distilling | Innovation Beverage vs. Willamette Valley Vineyards | Innovation Beverage vs. Diageo PLC ADR |
| MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Diageo PLC ADR | MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Constellation Brands Class |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |