Correlation Between Brown Forman and EAST Old

Can any of the company-specific risk be diversified away by investing in both Brown Forman and EAST Old 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 Brown Forman and EAST Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brown Forman and EAST Old, you can compare the effects of market volatilities on Brown Forman and EAST Old 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 Brown Forman with a short position of EAST Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and EAST Old.

Diversification Opportunities for Brown Forman and EAST Old

0.0

Correlation Coefficient

Brown Forman  EAST Old

Pay attention - limited upside

The 3 months correlation between Brown and EAST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and EAST Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST Old and Brown Forman 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 Brown Forman are associated (or correlated) with EAST Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST Old has no effect on the direction of Brown Forman i.e., Brown Forman and EAST Old go up and down completely randomly.

Pair Corralation between Brown Forman and EAST Old

If you would invest (100.00) in EAST Old on December 3, 2024 and sell it today you would earn a total of  100.00  from holding EAST Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Brown Forman  vs.  EAST Old

Brown Forman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brown Forman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EAST Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EAST Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brown Forman and EAST Old

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

The idea behind Brown Forman and EAST Old 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.