Correlation Between PureTech Health and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both PureTech Health and Virgin Wines 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 PureTech Health and Virgin Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Virgin Wines UK, you can compare the effects of market volatilities on PureTech Health and Virgin Wines 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 PureTech Health with a short position of Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Virgin Wines.
Diversification Opportunities for PureTech Health and Virgin Wines
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PureTech and Virgin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK and PureTech 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 PureTech Health plc are associated (or correlated) with Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of PureTech Health i.e., PureTech Health and Virgin Wines go up and down completely randomly.
Pair Corralation between PureTech Health and Virgin Wines
Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Virgin Wines. In addition to that, PureTech Health is 1.29 times more volatile than Virgin Wines UK. It trades about -0.17 of its total potential returns per unit of risk. Virgin Wines UK is currently generating about -0.17 per unit of volatility. If you would invest 3,550 in Virgin Wines UK on September 24, 2024 and sell it today you would lose (250.00) from holding Virgin Wines UK or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Virgin Wines UK
Performance |
| Timeline |
| PureTech Health plc |
| Virgin Wines UK |
PureTech Health and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Virgin Wines
The main advantage of trading using opposite PureTech Health and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| PureTech Health vs. Toyota Motor Corp | PureTech Health vs. SoftBank Group Corp | PureTech Health vs. OTP Bank Nyrt | PureTech Health vs. Public Service Enterprise |
| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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