Correlation Between Pick N and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Pick N and ITALIAN WINE 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 Pick N and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick n Pay and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Pick N and ITALIAN WINE 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 Pick N with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and ITALIAN WINE.
Diversification Opportunities for Pick N and ITALIAN WINE
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pick and ITALIAN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pick n Pay and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and Pick N 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 Pick n Pay are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Pick N i.e., Pick N and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Pick N and ITALIAN WINE
Assuming the 90 days horizon Pick n Pay is expected to generate 14.79 times more return on investment than ITALIAN WINE. However, Pick N is 14.79 times more volatile than ITALIAN WINE BRANDS. It trades about 0.04 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.01 per unit of risk. If you would invest 204.00 in Pick n Pay on November 30, 2024 and sell it today you would lose (54.00) from holding Pick n Pay or give up 26.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pick n Pay vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Pick n Pay |
| ITALIAN WINE BRANDS |
Pick N and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pick N and ITALIAN WINE
The main advantage of trading using opposite Pick N and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Pick N vs. Insurance Australia Group | Pick N vs. QBE Insurance Group | Pick N vs. Zurich Insurance Group | Pick N vs. HANOVER INSURANCE |
| ITALIAN WINE vs. Uber Technologies | ITALIAN WINE vs. Zijin Mining Group | ITALIAN WINE vs. Kingdee International Software | ITALIAN WINE vs. Playtech plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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