Correlation Between Marie Brizard and Crosswood

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

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

Diversification Opportunities for Marie Brizard and Crosswood

-0.49

Correlation Coefficient

Marie Brizard  Crosswood

Very good diversification

The 3 months correlation between Marie and Crosswood is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Marie Brizard Wine and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood and Marie Brizard 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 Marie Brizard Wine are associated (or correlated) with Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of Marie Brizard i.e., Marie Brizard and Crosswood go up and down completely randomly.

Pair Corralation between Marie Brizard and Crosswood

Assuming the 90 days trading horizon Marie Brizard Wine is expected to under-perform the Crosswood. But the stock apears to be less risky and, when comparing its historical volatility, Marie Brizard Wine is 2.29 times less risky than Crosswood. The stock trades about -0.21 of its potential returns per unit of risk. The Crosswood is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Crosswood on October 27, 2024 and sell it today you would earn a total of  80.00  from holding Crosswood or generate 8.0% return on investment over 90 days.

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

Marie Brizard Wine  vs.  Crosswood

Marie Brizard Wine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marie Brizard Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Crosswood

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crosswood are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Crosswood sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marie Brizard and Crosswood

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

The idea behind Marie Brizard Wine and Crosswood 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.