Correlation Between Vintage Wine and Crimson Wine
Can any of the company-specific risk be diversified away by investing in both Vintage Wine and Crimson Wine 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 Vintage Wine and Crimson Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vintage Wine Estates and Crimson Wine, you can compare the effects of market volatilities on Vintage Wine and Crimson Wine 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 Vintage Wine with a short position of Crimson Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vintage Wine and Crimson Wine.
Diversification Opportunities for Vintage Wine and Crimson Wine
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vintage and Crimson is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vintage Wine Estates and Crimson Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crimson Wine and Vintage Wine 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 Vintage Wine Estates are associated (or correlated) with Crimson Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crimson Wine has no effect on the direction of Vintage Wine i.e., Vintage Wine and Crimson Wine go up and down completely randomly.
Pair Corralation between Vintage Wine and Crimson Wine
Considering the 90-day investment horizon Vintage Wine Estates is expected to under-perform the Crimson Wine. In addition to that, Vintage Wine is 10.34 times more volatile than Crimson Wine. It trades about -0.08 of its total potential returns per unit of risk. Crimson Wine is currently generating about 0.04 per unit of volatility. If you would invest 576.00 in Crimson Wine on August 28, 2024 and sell it today you would earn a total of 79.00 from holding Crimson Wine or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.3% |
| Values | Daily Returns |
Vintage Wine Estates vs. Crimson Wine
Performance |
| Timeline |
| Vintage Wine Estates |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Crimson Wine |
Vintage Wine and Crimson Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vintage Wine and Crimson Wine
The main advantage of trading using opposite Vintage Wine and Crimson Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vintage Wine position performs unexpectedly, Crimson Wine 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 Crimson Wine will offset losses from the drop in Crimson Wine's long position.| Vintage Wine vs. MGP Ingredients | Vintage Wine vs. Brown Forman | Vintage Wine vs. Diageo PLC ADR | Vintage Wine vs. Brown Forman |
| Crimson Wine vs. Pernod Ricard SA | Crimson Wine vs. Naked Wines plc | Crimson Wine vs. Willamette Valley Vineyards | Crimson Wine vs. Brown Forman |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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