Correlation Between Brown Forman and CALTAGIRONE EDITORE

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

By analyzing existing cross correlation between Brown Forman Corp and CALTAGIRONE EDITORE, you can compare the effects of market volatilities on Brown Forman and CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and CALTAGIRONE EDITORE.

Diversification Opportunities for Brown Forman and CALTAGIRONE EDITORE

-0.44

Correlation Coefficient

Brown Forman  CALTAGIRONE EDITORE

Very good diversification

The 3 months correlation between Brown and CALTAGIRONE is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman Corp and CALTAGIRONE EDITORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CALTAGIRONE EDITORE 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 Corp are associated (or correlated) with CALTAGIRONE EDITORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CALTAGIRONE EDITORE has no effect on the direction of Brown Forman i.e., Brown Forman and CALTAGIRONE EDITORE go up and down completely randomly.

Pair Corralation between Brown Forman and CALTAGIRONE EDITORE

Assuming the 90 days trading horizon Brown Forman Corp is expected to under-perform the CALTAGIRONE EDITORE. But the stock apears to be less risky and, when comparing its historical volatility, Brown Forman Corp is 1.33 times less risky than CALTAGIRONE EDITORE. The stock trades about -0.05 of its potential returns per unit of risk. The CALTAGIRONE EDITORE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  88.00  in CALTAGIRONE EDITORE on October 11, 2024 and sell it today you would earn a total of  45.00  from holding CALTAGIRONE EDITORE or generate 51.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Brown Forman Corp  vs.  CALTAGIRONE EDITORE

Brown Forman Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brown Forman Corp 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CALTAGIRONE EDITORE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CALTAGIRONE EDITORE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CALTAGIRONE EDITORE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brown Forman and CALTAGIRONE EDITORE

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

The idea behind Brown Forman Corp and CALTAGIRONE EDITORE 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.