Correlation Between Virgin Wines and Lowland Investment
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Lowland Investment 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 Lowland Investment 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 Lowland Investment Co, you can compare the effects of market volatilities on Virgin Wines and Lowland Investment 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 Lowland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Lowland Investment.
Diversification Opportunities for Virgin Wines and Lowland Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virgin and Lowland is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland Investment 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 Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of Virgin Wines i.e., Virgin Wines and Lowland Investment go up and down completely randomly.
Pair Corralation between Virgin Wines and Lowland Investment
Assuming the 90 days trading horizon Virgin Wines UK is expected to generate 5.33 times more return on investment than Lowland Investment. However, Virgin Wines is 5.33 times more volatile than Lowland Investment Co. It trades about 0.38 of its potential returns per unit of risk. Lowland Investment Co is currently generating about 0.08 per unit of risk. If you would invest 3,050 in Virgin Wines UK on December 1, 2024 and sell it today you would earn a total of 950.00 from holding Virgin Wines UK or generate 31.15% 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. Lowland Investment Co
Performance |
| Timeline |
| Virgin Wines UK |
| Lowland Investment |
Virgin Wines and Lowland Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Lowland Investment
The main advantage of trading using opposite Virgin Wines and Lowland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, Lowland Investment 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 Lowland Investment will offset losses from the drop in Lowland Investment's long position.| Virgin Wines vs. New Residential Investment | Virgin Wines vs. Endeavour Mining Corp | Virgin Wines vs. iShares Physical Silver | Virgin Wines vs. Griffin Mining |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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