Correlation Between Strategic Investments and Fevertree Drinks

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

By analyzing existing cross correlation between Strategic Investments AS and Fevertree Drinks PLC, you can compare the effects of market volatilities on Strategic Investments and Fevertree Drinks 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 Strategic Investments with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Fevertree Drinks.

Diversification Opportunities for Strategic Investments and Fevertree Drinks

-0.22

Correlation Coefficient

Strategic Investments  Fevertree Drinks

Very good diversification

The 3 months correlation between Strategic and Fevertree is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Strategic Investments i.e., Strategic Investments and Fevertree Drinks go up and down completely randomly.

Pair Corralation between Strategic Investments and Fevertree Drinks

Assuming the 90 days horizon Strategic Investments is expected to generate 1.77 times less return on investment than Fevertree Drinks. In addition to that, Strategic Investments is 2.22 times more volatile than Fevertree Drinks PLC. It trades about 0.02 of its total potential returns per unit of risk. Fevertree Drinks PLC is currently generating about 0.09 per unit of volatility. If you would invest  805.00  in Fevertree Drinks PLC on December 29, 2024 and sell it today you would earn a total of  160.00  from holding Fevertree Drinks PLC or generate 19.88% return on investment over 90 days.

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

Strategic Investments AS  vs.  Fevertree Drinks PLC

Strategic Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Strategic Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fevertree Drinks PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Fevertree Drinks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and Fevertree Drinks

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

The idea behind Strategic Investments AS and Fevertree Drinks PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.