Correlation Between Kenvue and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Kenvue and Virgin Group 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 Kenvue and Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenvue Inc and Virgin Group Acquisition, you can compare the effects of market volatilities on Kenvue and Virgin Group 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 Kenvue with a short position of Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenvue and Virgin Group.
Diversification Opportunities for Kenvue and Virgin Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kenvue and Virgin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and Kenvue 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 Kenvue Inc are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Kenvue i.e., Kenvue and Virgin Group go up and down completely randomly.
Pair Corralation between Kenvue and Virgin Group
Given the investment horizon of 90 days Kenvue Inc is expected to generate 0.32 times more return on investment than Virgin Group. However, Kenvue Inc is 3.14 times less risky than Virgin Group. It trades about 0.25 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.04 per unit of risk. If you would invest 2,268 in Kenvue Inc on August 28, 2024 and sell it today you would earn a total of 156.00 from holding Kenvue Inc or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenvue Inc vs. Virgin Group Acquisition
Performance |
| Timeline |
| Kenvue Inc |
| Virgin Group Acquisition |
Kenvue and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenvue and Virgin Group
The main advantage of trading using opposite Kenvue and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.The idea behind Kenvue Inc and Virgin Group Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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