Correlation Between Crimson Wine and Vodka Brands

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

By analyzing existing cross correlation between Crimson Wine and Vodka Brands Corp, you can compare the effects of market volatilities on Crimson Wine and Vodka Brands 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 Vodka Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Vodka Brands.

Diversification Opportunities for Crimson Wine and Vodka Brands

-0.56

Correlation Coefficient

Crimson Wine  Vodka Brands

Excellent diversification

The 3 months correlation between Crimson and Vodka is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of Crimson Wine i.e., Crimson Wine and Vodka Brands go up and down completely randomly.

Pair Corralation between Crimson Wine and Vodka Brands

Given the investment horizon of 90 days Crimson Wine is expected to generate 1.74 times more return on investment than Vodka Brands. However, Crimson Wine is 1.74 times more volatile than Vodka Brands Corp. It trades about -0.11 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about -0.22 per unit of risk. If you would invest  662.00  in Crimson Wine on October 1, 2024 and sell it today you would lose (27.00) from holding Crimson Wine or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Crimson Wine  vs.  Vodka Brands Corp

Crimson Wine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crimson Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Crimson Wine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crimson Wine and Vodka Brands

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

The idea behind Crimson Wine and Vodka Brands Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .