Correlation Between Virgin Wines and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Virgin Wines and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Supermarket Income.
Diversification Opportunities for Virgin Wines and Supermarket Income
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virgin and Supermarket is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Virgin Wines i.e., Virgin Wines and Supermarket Income go up and down completely randomly.
Pair Corralation between Virgin Wines and Supermarket Income
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Supermarket Income. In addition to that, Virgin Wines is 1.45 times more volatile than Supermarket Income REIT. It trades about -0.18 of its total potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.1 per unit of volatility. If you would invest 7,130 in Supermarket Income REIT on October 30, 2024 and sell it today you would lose (390.00) from holding Supermarket Income REIT or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Supermarket Income REIT
Performance |
| Timeline |
| Virgin Wines UK |
| Supermarket Income REIT |
Virgin Wines and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Supermarket Income
The main advantage of trading using opposite Virgin Wines and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Toyota Motor Corp | Virgin Wines vs. MOL Hungarian Oil |
| Supermarket Income vs. Ebro Foods | Supermarket Income vs. National Beverage Corp | Supermarket Income vs. MoneysupermarketCom Group PLC | Supermarket Income vs. Games Workshop 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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