Correlation Between Iconic Brands and Vintage Wine
Can any of the company-specific risk be diversified away by investing in both Iconic Brands and Vintage 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 Iconic Brands and Vintage Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iconic Brands and Vintage Wine Estates, you can compare the effects of market volatilities on Iconic Brands and Vintage 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 Iconic Brands with a short position of Vintage Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iconic Brands and Vintage Wine.
Diversification Opportunities for Iconic Brands and Vintage Wine
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iconic and Vintage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iconic Brands and Vintage Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vintage Wine Estates and Iconic Brands 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 Iconic Brands are associated (or correlated) with Vintage Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vintage Wine Estates has no effect on the direction of Iconic Brands i.e., Iconic Brands and Vintage Wine go up and down completely randomly.
Pair Corralation between Iconic Brands and Vintage Wine
Given the investment horizon of 90 days Iconic Brands is expected to generate 11.45 times more return on investment than Vintage Wine. However, Iconic Brands is 11.45 times more volatile than Vintage Wine Estates. It trades about 0.16 of its potential returns per unit of risk. Vintage Wine Estates is currently generating about -0.08 per unit of risk. If you would invest 0.02 in Iconic Brands on August 24, 2024 and sell it today you would lose (0.01) from holding Iconic Brands or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 86.35% |
| Values | Daily Returns |
Iconic Brands vs. Vintage Wine Estates
Performance |
| Timeline |
| Iconic Brands |
| Vintage Wine Estates |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Iconic Brands and Vintage Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iconic Brands and Vintage Wine
The main advantage of trading using opposite Iconic Brands and Vintage Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iconic Brands position performs unexpectedly, Vintage 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 Vintage Wine will offset losses from the drop in Vintage Wine's long position.| Iconic Brands vs. Diageo PLC ADR | Iconic Brands vs. Pernod Ricard SA | Iconic Brands vs. Pernod Ricard SA | Iconic Brands vs. Constellation Brands Class |
| Vintage Wine vs. MGP Ingredients | Vintage Wine vs. Brown Forman | Vintage Wine vs. Diageo PLC ADR | Vintage Wine vs. Brown Forman |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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