Correlation Between Vodka Brands and Stepan
Can any of the company-specific risk be diversified away by investing in both Vodka Brands and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Vodka Brands and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodka Brands and Stepan.
Diversification Opportunities for Vodka Brands and Stepan
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vodka and Stepan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Vodka Brands i.e., Vodka Brands and Stepan go up and down completely randomly.
Pair Corralation between Vodka Brands and Stepan
Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 2.15 times more return on investment than Stepan. However, Vodka Brands is 2.15 times more volatile than Stepan Company. It trades about 0.21 of its potential returns per unit of risk. Stepan Company is currently generating about -0.13 per unit of risk. If you would invest 99.00 in Vodka Brands Corp on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Vodka Brands Corp or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodka Brands Corp vs. Stepan Company
Performance |
| Timeline |
| Vodka Brands Corp |
| Stepan Company |
Vodka Brands and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodka Brands and Stepan
The main advantage of trading using opposite Vodka Brands and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Vodka Brands vs. Andrew Peller Limited | Vodka Brands vs. Aristocrat Group Corp | Vodka Brands vs. Iconic Brands | Vodka Brands vs. Naked Wines 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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