Correlation Between VIVA WINE and LG Electronics
Can any of the company-specific risk be diversified away by investing in both VIVA WINE and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on VIVA WINE and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and LG Electronics.
Diversification Opportunities for VIVA WINE and LG Electronics
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VIVA and LGLG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of VIVA WINE i.e., VIVA WINE and LG Electronics go up and down completely randomly.
Pair Corralation between VIVA WINE and LG Electronics
Assuming the 90 days horizon VIVA WINE is expected to generate 1.16 times less return on investment than LG Electronics. But when comparing it to its historical volatility, VIVA WINE GROUP is 1.55 times less risky than LG Electronics. It trades about 0.02 of its potential returns per unit of risk. LG Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,350 in LG Electronics on November 5, 2024 and sell it today you would earn a total of 0.00 from holding LG Electronics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. LG Electronics
Performance |
| Timeline |
| VIVA WINE GROUP |
| LG Electronics |
VIVA WINE and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and LG Electronics
The main advantage of trading using opposite VIVA WINE and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| VIVA WINE vs. Darden Restaurants | VIVA WINE vs. USWE SPORTS AB | VIVA WINE vs. Grand Canyon Education | VIVA WINE vs. SWISS WATER DECAFFCOFFEE |
| LG Electronics vs. Kingdee International Software | LG Electronics vs. PKSHA TECHNOLOGY INC | LG Electronics vs. Bio Techne Corp | LG Electronics vs. VELA TECHNOLPLC LS 0001 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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