Correlation Between WIMFARM SA and ITALIAN WINE

Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and ITALIAN 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 WIMFARM SA and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WIMFARM SA EO and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on WIMFARM SA and ITALIAN 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 WIMFARM SA with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and ITALIAN WINE.

Diversification Opportunities for WIMFARM SA and ITALIAN WINE

-0.35

Correlation Coefficient

WIMFARM SA  ITALIAN WINE

Very good diversification

The 3 months correlation between WIMFARM and ITALIAN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and ITALIAN WINE go up and down completely randomly.

Pair Corralation between WIMFARM SA and ITALIAN WINE

Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the ITALIAN WINE. In addition to that, WIMFARM SA is 2.08 times more volatile than ITALIAN WINE BRANDS. It trades about -0.02 of its total potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.06 per unit of volatility. If you would invest  1,778  in ITALIAN WINE BRANDS on October 6, 2024 and sell it today you would earn a total of  462.00  from holding ITALIAN WINE BRANDS or generate 25.98% return on investment over 90 days.

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

WIMFARM SA EO  vs.  ITALIAN WINE BRANDS

WIMFARM SA EO

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with WIMFARM SA and ITALIAN WINE

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

The idea behind WIMFARM SA EO and ITALIAN WINE BRANDS 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.