Correlation Between LQR House and Duckhorn Portfolio

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

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

Diversification Opportunities for LQR House and Duckhorn Portfolio

0.55

Correlation Coefficient

LQR House  Duckhorn Portfolio

Very weak diversification

The 3 months correlation between LQR and Duckhorn is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LQR House Common and Duckhorn Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duckhorn Portfolio and LQR House 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 LQR House Common 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 LQR House i.e., LQR House and Duckhorn Portfolio go up and down completely randomly.

Pair Corralation between LQR House and Duckhorn Portfolio

Considering the 90-day investment horizon LQR House Common is expected to generate 64.15 times more return on investment than Duckhorn Portfolio. However, LQR House is 64.15 times more volatile than Duckhorn Portfolio. It trades about 0.2 of its potential returns per unit of risk. Duckhorn Portfolio is currently generating about 0.14 per unit of risk. If you would invest  60.00  in LQR House Common on October 21, 2024 and sell it today you would earn a total of  74.00  from holding LQR House Common or generate 123.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.0%
Values	Daily Returns

LQR House Common  vs.  Duckhorn Portfolio

LQR House Common

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LQR House Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Duckhorn Portfolio

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with LQR House and Duckhorn Portfolio

The main advantage of trading using opposite LQR House and Duckhorn Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LQR House 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 LQR House Common 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.