Correlation Between Pernod Ricard and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and MGP Ingredients 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 Pernod Ricard and MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and MGP Ingredients, you can compare the effects of market volatilities on Pernod Ricard and MGP Ingredients 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 Pernod Ricard with a short position of MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and MGP Ingredients.
Diversification Opportunities for Pernod Ricard and MGP Ingredients
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pernod and MGP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and MGP Ingredients go up and down completely randomly.
Pair Corralation between Pernod Ricard and MGP Ingredients
Assuming the 90 days trading horizon Pernod Ricard SA is expected to generate 0.47 times more return on investment than MGP Ingredients. However, Pernod Ricard SA is 2.12 times less risky than MGP Ingredients. It trades about -0.29 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.24 per unit of risk. If you would invest 12,172 in Pernod Ricard SA on August 29, 2024 and sell it today you would lose (1,617) from holding Pernod Ricard SA or give up 13.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pernod Ricard SA vs. MGP Ingredients
Performance |
| Timeline |
| Pernod Ricard SA |
| MGP Ingredients |
Pernod Ricard and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and MGP Ingredients
The main advantage of trading using opposite Pernod Ricard and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.| Pernod Ricard vs. Superior Plus Corp | Pernod Ricard vs. NMI Holdings | Pernod Ricard vs. Origin Agritech | Pernod Ricard vs. SIVERS SEMICONDUCTORS AB |
| MGP Ingredients vs. WisdomTree Investments | MGP Ingredients vs. ETFS Coffee ETC | MGP Ingredients vs. IMAGIN MEDICAL INC | MGP Ingredients vs. Microbot Medical |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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