Correlation Between Virgin Wines and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Virgin Wines and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Intermediate Capital.
Diversification Opportunities for Virgin Wines and Intermediate Capital
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virgin and Intermediate is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Virgin Wines i.e., Virgin Wines and Intermediate Capital go up and down completely randomly.
Pair Corralation between Virgin Wines and Intermediate Capital
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Intermediate Capital. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 4.47 times less risky than Intermediate Capital. The stock trades about -0.12 of its potential returns per unit of risk. The Intermediate Capital Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 206,200 in Intermediate Capital Group on September 1, 2024 and sell it today you would earn a total of 5,600 from holding Intermediate Capital Group or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Intermediate Capital Group
Performance |
| Timeline |
| Virgin Wines UK |
| Intermediate Capital |
Virgin Wines and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Intermediate Capital
The main advantage of trading using opposite Virgin Wines and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Virgin Wines vs. GreenX Metals | Virgin Wines vs. Batm Advanced Communications | Virgin Wines vs. SBM Offshore NV | Virgin Wines vs. Zoom Video Communications |
| Intermediate Capital vs. Virgin Wines UK | Intermediate Capital vs. Aeorema Communications Plc | Intermediate Capital vs. Spirent Communications plc | Intermediate Capital vs. BE Semiconductor Industries |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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