Correlation Between ITALIAN WINE and CARSALES
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on ITALIAN WINE and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and CARSALES.
Diversification Opportunities for ITALIAN WINE and CARSALES
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ITALIAN and CARSALES is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and CARSALES go up and down completely randomly.
Pair Corralation between ITALIAN WINE and CARSALES
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 1.19 times more return on investment than CARSALES. However, ITALIAN WINE is 1.19 times more volatile than CARSALESCOM. It trades about 0.08 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.09 per unit of risk. If you would invest 1,736 in ITALIAN WINE BRANDS on September 3, 2024 and sell it today you would earn a total of 474.00 from holding ITALIAN WINE BRANDS or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. CARSALESCOM
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| CARSALESCOM |
ITALIAN WINE and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and CARSALES
The main advantage of trading using opposite ITALIAN WINE and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp | ITALIAN WINE vs. NMI Holdings | ITALIAN WINE vs. Origin Agritech |
| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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