Correlation Between Virgin Wines and Centaur Media
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Virgin Wines and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Centaur Media.
Diversification Opportunities for Virgin Wines and Centaur Media
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virgin and Centaur is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Virgin Wines i.e., Virgin Wines and Centaur Media go up and down completely randomly.
Pair Corralation between Virgin Wines and Centaur Media
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Centaur Media. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 1.68 times less risky than Centaur Media. The stock trades about -0.18 of its potential returns per unit of risk. The Centaur Media is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,250 in Centaur Media on October 30, 2024 and sell it today you would earn a total of 700.00 from holding Centaur Media or generate 31.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Centaur Media
Performance |
| Timeline |
| Virgin Wines UK |
| Centaur Media |
Virgin Wines and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Centaur Media
The main advantage of trading using opposite Virgin Wines and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Toyota Motor Corp | Virgin Wines vs. MOL Hungarian Oil |
| Centaur Media vs. Fevertree Drinks Plc | Centaur Media vs. Silver Bullet Data | Centaur Media vs. Automatic Data Processing | Centaur Media vs. National Beverage 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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