Correlation Between Marie Brizard and Nestl SA

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

By analyzing existing cross correlation between Marie Brizard Wine and Nestl SA, you can compare the effects of market volatilities on Marie Brizard and Nestl SA 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 Marie Brizard with a short position of Nestl SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marie Brizard and Nestl SA.

Diversification Opportunities for Marie Brizard and Nestl SA

-0.92

Correlation Coefficient

Marie Brizard  Nestl SA

Pay attention - limited upside

The 3 months correlation between Marie and Nestl is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Marie Brizard Wine and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestl SA and Marie Brizard 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 Marie Brizard Wine are associated (or correlated) with Nestl SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestl SA has no effect on the direction of Marie Brizard i.e., Marie Brizard and Nestl SA go up and down completely randomly.

Pair Corralation between Marie Brizard and Nestl SA

Assuming the 90 days trading horizon Marie Brizard Wine is expected to under-perform the Nestl SA. But the stock apears to be less risky and, when comparing its historical volatility, Marie Brizard Wine is 1.24 times less risky than Nestl SA. The stock trades about -0.27 of its potential returns per unit of risk. The Nestl SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,960  in Nestl SA on December 21, 2024 and sell it today you would earn a total of  1,500  from holding Nestl SA or generate 18.84% return on investment over 90 days.

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

Marie Brizard Wine  vs.  Nestl SA

Marie Brizard Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marie Brizard Wine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nestl SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nestl SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nestl SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marie Brizard and Nestl SA

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

The idea behind Marie Brizard Wine and Nestl SA 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.