Correlation Between Virgin Wines and Edita Food
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Virgin Wines and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Edita Food.
Diversification Opportunities for Virgin Wines and Edita Food
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virgin and Edita is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Virgin Wines i.e., Virgin Wines and Edita Food go up and down completely randomly.
Pair Corralation between Virgin Wines and Edita Food
Assuming the 90 days trading horizon Virgin Wines is expected to generate 4.25 times less return on investment than Edita Food. But when comparing it to its historical volatility, Virgin Wines UK is 1.26 times less risky than Edita Food. It trades about 0.0 of its potential returns per unit of risk. Edita Food Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Edita Food Industries on August 24, 2024 and sell it today you would lose (11.00) from holding Edita Food Industries or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Edita Food Industries
Performance |
| Timeline |
| Virgin Wines UK |
| Edita Food Industries |
Virgin Wines and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Edita Food
The main advantage of trading using opposite Virgin Wines and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food'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 |
| Edita Food vs. Endeavour Mining Corp | Edita Food vs. Blackrock World Mining | Edita Food vs. Global Net Lease | Edita Food vs. Anglesey Mining |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |