Correlation Between Virgin Wines and European Metals
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Virgin Wines and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and European Metals.
Diversification Opportunities for Virgin Wines and European Metals
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virgin and European is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Virgin Wines i.e., Virgin Wines and European Metals go up and down completely randomly.
Pair Corralation between Virgin Wines and European Metals
Assuming the 90 days trading horizon Virgin Wines UK is expected to generate 0.65 times more return on investment than European Metals. However, Virgin Wines UK is 1.53 times less risky than European Metals. It trades about 0.02 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.11 per unit of risk. If you would invest 3,150 in Virgin Wines UK on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Virgin Wines UK or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. European Metals Holdings
Performance |
| Timeline |
| Virgin Wines UK |
| European Metals Holdings |
Virgin Wines and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and European Metals
The main advantage of trading using opposite Virgin Wines and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp | Virgin Wines vs. SoftBank Group Corp | Virgin Wines vs. Halyk Bank of |
| European Metals vs. National Bank of | European Metals vs. Alior Bank SA | European Metals vs. Solstad Offshore ASA | European Metals vs. St Galler Kantonalbank |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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