Correlation Between Remy Cointreau and Brown Forman
Can any of the company-specific risk be diversified away by investing in both Remy Cointreau and Brown Forman 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 Remy Cointreau and Brown Forman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Remy Cointreau SA and Brown Forman, you can compare the effects of market volatilities on Remy Cointreau and Brown Forman 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 Remy Cointreau with a short position of Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Remy Cointreau and Brown Forman.
Diversification Opportunities for Remy Cointreau and Brown Forman
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Remy and Brown is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Remy Cointreau SA and Brown Forman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman and Remy Cointreau 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 Remy Cointreau SA are associated (or correlated) with Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of Remy Cointreau i.e., Remy Cointreau and Brown Forman go up and down completely randomly.
Pair Corralation between Remy Cointreau and Brown Forman
Assuming the 90 days horizon Remy Cointreau SA is expected to generate 1.59 times more return on investment than Brown Forman. However, Remy Cointreau is 1.59 times more volatile than Brown Forman. It trades about 0.01 of its potential returns per unit of risk. Brown Forman is currently generating about -0.26 per unit of risk. If you would invest 585.00 in Remy Cointreau SA on November 2, 2024 and sell it today you would lose (1.00) from holding Remy Cointreau SA or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Remy Cointreau SA vs. Brown Forman
Performance |
| Timeline |
| Remy Cointreau SA |
| Brown Forman |
Remy Cointreau and Brown Forman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Remy Cointreau and Brown Forman
The main advantage of trading using opposite Remy Cointreau and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Remy Cointreau position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.| Remy Cointreau vs. Diageo PLC ADR | Remy Cointreau vs. Pernod Ricard SA | Remy Cointreau vs. Treasury Wine Estates | Remy Cointreau vs. MGP Ingredients |
| Brown Forman vs. Pernod Ricard SA | Brown Forman vs. Willamette Valley Vineyards | Brown Forman vs. MGP Ingredients | Brown Forman vs. Brown Forman |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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