Correlation Between Vintage Wine and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Vintage Wine and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Vintage Wine and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vintage Wine and Dow Jones.
Diversification Opportunities for Vintage Wine and Dow Jones
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vintage and Dow is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vintage Wine Estates and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Vintage Wine i.e., Vintage Wine and Dow Jones go up and down completely randomly.
Pair Corralation between Vintage Wine and Dow Jones
Considering the 90-day investment horizon Vintage Wine Estates is expected to under-perform the Dow Jones. In addition to that, Vintage Wine is 19.13 times more volatile than Dow Jones Industrial. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.3% |
| Values | Daily Returns |
Vintage Wine Estates vs. Dow Jones Industrial
Performance |
| Timeline |
Vintage Wine and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Vintage Wine Estates
Pair trading matchups for Vintage Wine
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Vintage Wine and Dow Jones
The main advantage of trading using opposite Vintage Wine and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vintage Wine position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Vintage Wine vs. MGP Ingredients | Vintage Wine vs. Brown Forman | Vintage Wine vs. Diageo PLC ADR | Vintage Wine vs. Brown Forman |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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