Correlation Between Pinstripes Holdings and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Pinstripes Holdings and Diageo PLC 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 Pinstripes Holdings and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinstripes Holdings and Diageo PLC ADR, you can compare the effects of market volatilities on Pinstripes Holdings and Diageo PLC 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 Pinstripes Holdings with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinstripes Holdings and Diageo PLC.
Diversification Opportunities for Pinstripes Holdings and Diageo PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pinstripes and Diageo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pinstripes Holdings and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Pinstripes Holdings 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 Pinstripes Holdings are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Pinstripes Holdings i.e., Pinstripes Holdings and Diageo PLC go up and down completely randomly.
Pair Corralation between Pinstripes Holdings and Diageo PLC
Given the investment horizon of 90 days Pinstripes Holdings is expected to under-perform the Diageo PLC. In addition to that, Pinstripes Holdings is 4.95 times more volatile than Diageo PLC ADR. It trades about -0.07 of its total potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.05 per unit of volatility. If you would invest 16,228 in Diageo PLC ADR on August 31, 2024 and sell it today you would lose (4,292) from holding Diageo PLC ADR or give up 26.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinstripes Holdings vs. Diageo PLC ADR
Performance |
| Timeline |
| Pinstripes Holdings |
| Diageo PLC ADR |
Pinstripes Holdings and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinstripes Holdings and Diageo PLC
The main advantage of trading using opposite Pinstripes Holdings and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinstripes Holdings position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Pinstripes Holdings vs. The Joint Corp | Pinstripes Holdings vs. Cardinal Health | Pinstripes Holdings vs. Valneva SE ADR | Pinstripes Holdings vs. Aquestive Therapeutics |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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