Correlation Between Virgin Wines and GoldMining
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and GoldMining 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 Virgin Wines and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Wines UK and GoldMining, you can compare the effects of market volatilities on Virgin Wines and GoldMining 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 Virgin Wines with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and GoldMining.
Diversification Opportunities for Virgin Wines and GoldMining
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virgin and GoldMining is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Virgin Wines 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 Virgin Wines UK are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Virgin Wines i.e., Virgin Wines and GoldMining go up and down completely randomly.
Pair Corralation between Virgin Wines and GoldMining
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 1.66 times less risky than GoldMining. The stock trades about 0.0 of its potential returns per unit of risk. The GoldMining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 125.00 in GoldMining on August 24, 2024 and sell it today you would earn a total of 4.00 from holding GoldMining or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.2% |
| Values | Daily Returns |
Virgin Wines UK vs. GoldMining
Performance |
| Timeline |
| Virgin Wines UK |
| GoldMining |
Virgin Wines and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and GoldMining
The main advantage of trading using opposite Virgin Wines and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp |
| GoldMining vs. Quadrise Plc | GoldMining vs. Intuitive Investments Group | GoldMining vs. European Metals Holdings | GoldMining vs. Athelney Trust 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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