Correlation Between VIRGIN WINES and Insulet

Can any of the company-specific risk be diversified away by investing in both VIRGIN WINES and Insulet 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 Insulet 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 Insulet, you can compare the effects of market volatilities on VIRGIN WINES and Insulet 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 Insulet. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRGIN WINES and Insulet.

Diversification Opportunities for VIRGIN WINES and Insulet

0.53

Correlation Coefficient

VIRGIN WINES  Insulet

Very weak diversification

The 3 months correlation between VIRGIN and Insulet is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VIRGIN WINES UK and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of VIRGIN WINES i.e., VIRGIN WINES and Insulet go up and down completely randomly.

Pair Corralation between VIRGIN WINES and Insulet

Assuming the 90 days horizon VIRGIN WINES UK is expected to under-perform the Insulet. In addition to that, VIRGIN WINES is 3.72 times more volatile than Insulet. It trades about -0.1 of its total potential returns per unit of risk. Insulet is currently generating about -0.04 per unit of volatility. If you would invest  25,090  in Insulet on December 29, 2024 and sell it today you would lose (1,430) from holding Insulet or give up 5.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VIRGIN WINES UK  vs.  Insulet

VIRGIN WINES UK

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIRGIN WINES UK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Insulet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insulet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insulet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VIRGIN WINES and Insulet

The main advantage of trading using opposite VIRGIN WINES and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRGIN WINES position performs unexpectedly, Insulet 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 Insulet will offset losses from the drop in Insulet's long position.

The idea behind VIRGIN WINES UK and Insulet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.