Correlation Between Optima Health and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Optima Health and Fevertree Drinks 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 Optima Health and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Health plc and Fevertree Drinks Plc, you can compare the effects of market volatilities on Optima Health and Fevertree Drinks 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 Optima Health with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Fevertree Drinks.
Diversification Opportunities for Optima Health and Fevertree Drinks
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Optima and Fevertree is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Optima Health 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 Optima Health plc are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Optima Health i.e., Optima Health and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Optima Health and Fevertree Drinks
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.67 times more return on investment than Fevertree Drinks. However, Optima Health plc is 1.49 times less risky than Fevertree Drinks. It trades about -0.57 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.46 per unit of risk. If you would invest 15,400 in Optima Health plc on October 13, 2024 and sell it today you would lose (1,400) from holding Optima Health plc or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Optima Health plc vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Optima Health plc |
| Fevertree Drinks Plc |
Optima Health and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Fevertree Drinks
The main advantage of trading using opposite Optima Health and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Optima Health vs. Alliance Data Systems | Optima Health vs. Rosslyn Data Technologies | Optima Health vs. JD Sports Fashion | Optima Health vs. Westlake Chemical Corp |
| Fevertree Drinks vs. Bell Food Group | Fevertree Drinks vs. Beazer Homes USA | Fevertree Drinks vs. Hilton Food Group | Fevertree Drinks vs. United Airlines Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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