Correlation Between ITALIAN WINE and United Breweries
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and United Breweries 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 ITALIAN WINE and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and United Breweries Co, you can compare the effects of market volatilities on ITALIAN WINE and United Breweries 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 ITALIAN WINE with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and United Breweries.
Diversification Opportunities for ITALIAN WINE and United Breweries
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITALIAN and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and ITALIAN 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 ITALIAN WINE BRANDS are associated (or correlated) with United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and United Breweries go up and down completely randomly.
Pair Corralation between ITALIAN WINE and United Breweries
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 1.13 times more return on investment than United Breweries. However, ITALIAN WINE is 1.13 times more volatile than United Breweries Co. It trades about -0.01 of its potential returns per unit of risk. United Breweries Co is currently generating about -0.01 per unit of risk. If you would invest 2,827 in ITALIAN WINE BRANDS on October 20, 2024 and sell it today you would lose (467.00) from holding ITALIAN WINE BRANDS or give up 16.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. United Breweries Co
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| United Breweries |
ITALIAN WINE and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and United Breweries
The main advantage of trading using opposite ITALIAN WINE and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| ITALIAN WINE vs. Elmos Semiconductor SE | ITALIAN WINE vs. RETAIL FOOD GROUP | ITALIAN WINE vs. Semiconductor Manufacturing International | ITALIAN WINE vs. BE Semiconductor Industries |
| United Breweries vs. ITALIAN WINE BRANDS | United Breweries vs. BioNTech SE | United Breweries vs. SAN MIGUEL BREWERY | United Breweries vs. GLG LIFE TECH |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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