Correlation Between Vodka Brands and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Vodka Brands and Fenbo Holdings 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 Vodka Brands and Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodka Brands Corp and Fenbo Holdings Limited, you can compare the effects of market volatilities on Vodka Brands and Fenbo Holdings 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 Vodka Brands with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodka Brands and Fenbo Holdings.
Diversification Opportunities for Vodka Brands and Fenbo Holdings
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vodka and Fenbo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Vodka Brands i.e., Vodka Brands and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Vodka Brands and Fenbo Holdings
Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 0.32 times more return on investment than Fenbo Holdings. However, Vodka Brands Corp is 3.1 times less risky than Fenbo Holdings. It trades about -0.02 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest 136.00 in Vodka Brands Corp on September 1, 2024 and sell it today you would lose (24.00) from holding Vodka Brands Corp or give up 17.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vodka Brands Corp vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Vodka Brands Corp |
| Fenbo Holdings |
Vodka Brands and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodka Brands and Fenbo Holdings
The main advantage of trading using opposite Vodka Brands and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Vodka Brands vs. Diageo PLC ADR | Vodka Brands vs. Pernod Ricard SA | Vodka Brands vs. Constellation Brands Class | Vodka Brands vs. Brown Forman |
| Fenbo Holdings vs. Western Asset Investment | Fenbo Holdings vs. Sun Life Financial | Fenbo Holdings vs. SEI Investments | Fenbo Holdings vs. Fidus Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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