Correlation Between Virgin Wines and London Security
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and London Security 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 London Security 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 London Security Plc, you can compare the effects of market volatilities on Virgin Wines and London Security 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 London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and London Security.
Diversification Opportunities for Virgin Wines and London Security
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virgin and London is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc 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 London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Virgin Wines i.e., Virgin Wines and London Security go up and down completely randomly.
Pair Corralation between Virgin Wines and London Security
If you would invest 340,000 in London Security Plc on October 13, 2024 and sell it today you would earn a total of 0.00 from holding London Security Plc or generate 0.0% 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. London Security Plc
Performance |
| Timeline |
| Virgin Wines UK |
| London Security Plc |
Virgin Wines and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and London Security
The main advantage of trading using opposite Virgin Wines and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Virgin Wines vs. URU Metals | Virgin Wines vs. National Beverage Corp | Virgin Wines vs. European Metals Holdings | Virgin Wines vs. Premier Foods PLC |
| London Security vs. Virgin Wines UK | London Security vs. URU Metals | London Security vs. Gaztransport et Technigaz | London Security vs. Vitec Software Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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