Correlation Between Fevertree Drinks and State Bank

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

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

Diversification Opportunities for Fevertree Drinks and State Bank

-0.23

Correlation Coefficient

Fevertree Drinks  State Bank

Very good diversification

The 3 months correlation between Fevertree and State is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and State Bank go up and down completely randomly.

Pair Corralation between Fevertree Drinks and State Bank

Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the State Bank. In addition to that, Fevertree Drinks is 1.35 times more volatile than State Bank of. It trades about -0.03 of its total potential returns per unit of risk. State Bank of is currently generating about 0.07 per unit of volatility. If you would invest  5,935  in State Bank of on October 5, 2024 and sell it today you would earn a total of  3,385  from holding State Bank of or generate 57.03% return on investment over 90 days.

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

Fevertree Drinks Plc  vs.  State Bank of

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc 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.

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fevertree Drinks and State Bank

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

The idea behind Fevertree Drinks Plc and State Bank of 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 CEOs Directory module to screen CEOs from public companies around the world.