Correlation Between Crimson Wine and Duckhorn Portfolio

Can any of the company-specific risk be diversified away by investing in both Crimson Wine and Duckhorn Portfolio 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 Crimson Wine and Duckhorn Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Crimson Wine and Duckhorn Portfolio

0.68

Correlation Coefficient

Crimson Wine  Duckhorn Portfolio

Poor diversification

The 3 months correlation between Crimson and Duckhorn is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Duckhorn Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duckhorn Portfolio and Crimson Wine 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 Crimson Wine are associated (or correlated) with Duckhorn Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duckhorn Portfolio has no effect on the direction of Crimson Wine i.e., Crimson Wine and Duckhorn Portfolio go up and down completely randomly.

Pair Corralation between Crimson Wine and Duckhorn Portfolio

Given the investment horizon of 90 days Crimson Wine is expected to generate 10.72 times less return on investment than Duckhorn Portfolio. But when comparing it to its historical volatility, Crimson Wine is 5.18 times less risky than Duckhorn Portfolio. It trades about 0.06 of its potential returns per unit of risk. Duckhorn Portfolio is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  573.00  in Duckhorn Portfolio on September 12, 2024 and sell it today you would earn a total of  534.00  from holding Duckhorn Portfolio or generate 93.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Crimson Wine  vs.  Duckhorn Portfolio

Crimson Wine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crimson Wine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, Crimson Wine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Duckhorn Portfolio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duckhorn Portfolio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duckhorn Portfolio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crimson Wine and Duckhorn Portfolio

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

The idea behind Crimson Wine and Duckhorn Portfolio 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.