Correlation Between GWILLI FOOD and ViacomCBS

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

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

Diversification Opportunities for GWILLI FOOD and ViacomCBS

0.79

Correlation Coefficient

GWILLI FOOD  ViacomCBS

Poor diversification

The 3 months correlation between GWILLI and ViacomCBS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and ViacomCBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViacomCBS and GWILLI FOOD 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 GWILLI FOOD are associated (or correlated) with ViacomCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViacomCBS has no effect on the direction of GWILLI FOOD i.e., GWILLI FOOD and ViacomCBS go up and down completely randomly.

Pair Corralation between GWILLI FOOD and ViacomCBS

Assuming the 90 days trading horizon GWILLI FOOD is expected to generate 1.27 times more return on investment than ViacomCBS. However, GWILLI FOOD is 1.27 times more volatile than ViacomCBS. It trades about -0.03 of its potential returns per unit of risk. ViacomCBS is currently generating about -0.06 per unit of risk. If you would invest  1,520  in GWILLI FOOD on October 12, 2024 and sell it today you would lose (20.00) from holding GWILLI FOOD or give up 1.32% of portfolio value over 90 days.

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

GWILLI FOOD  vs.  ViacomCBS

GWILLI FOOD

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

ViacomCBS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ViacomCBS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ViacomCBS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GWILLI FOOD and ViacomCBS

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

The idea behind GWILLI FOOD and ViacomCBS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.