Correlation Between VIVA WINE and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both VIVA WINE and Eagle Materials 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 VIVA WINE and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and Eagle Materials, you can compare the effects of market volatilities on VIVA WINE and Eagle Materials 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 VIVA WINE with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Eagle Materials.
Diversification Opportunities for VIVA WINE and Eagle Materials
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VIVA and Eagle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of VIVA WINE i.e., VIVA WINE and Eagle Materials go up and down completely randomly.
Pair Corralation between VIVA WINE and Eagle Materials
Assuming the 90 days horizon VIVA WINE is expected to generate 2.51 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, VIVA WINE GROUP is 1.04 times less risky than Eagle Materials. It trades about 0.06 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 23,600 in Eagle Materials on November 1, 2024 and sell it today you would earn a total of 1,000.00 from holding Eagle Materials or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. Eagle Materials
Performance |
| Timeline |
| VIVA WINE GROUP |
| Eagle Materials |
VIVA WINE and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and Eagle Materials
The main advantage of trading using opposite VIVA WINE and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| VIVA WINE vs. AEON METALS LTD | VIVA WINE vs. Flutter Entertainment PLC | VIVA WINE vs. TOWNSQUARE MEDIA INC | VIVA WINE vs. Osisko Metals |
| Eagle Materials vs. VIVA WINE GROUP | Eagle Materials vs. Beta Systems Software | Eagle Materials vs. VITEC SOFTWARE GROUP | Eagle Materials vs. REGAL HOTEL INTL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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