Correlation Between ITALIAN WINE and Wayside Technology

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

By analyzing existing cross correlation between ITALIAN WINE BRANDS and Wayside Technology Group, you can compare the effects of market volatilities on ITALIAN WINE and Wayside Technology 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 ITALIAN WINE with a short position of Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Wayside Technology.

Diversification Opportunities for ITALIAN WINE and Wayside Technology

0.45

Correlation Coefficient

ITALIAN WINE  Wayside Technology

Very weak diversification

The 3 months correlation between ITALIAN and Wayside is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and Wayside Technology go up and down completely randomly.

Pair Corralation between ITALIAN WINE and Wayside Technology

Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 0.53 times more return on investment than Wayside Technology. However, ITALIAN WINE BRANDS is 1.89 times less risky than Wayside Technology. It trades about 0.22 of its potential returns per unit of risk. Wayside Technology Group is currently generating about -0.08 per unit of risk. If you would invest  2,240  in ITALIAN WINE BRANDS on October 3, 2024 and sell it today you would earn a total of  160.00  from holding ITALIAN WINE BRANDS or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

ITALIAN WINE BRANDS  vs.  Wayside Technology Group

ITALIAN WINE BRANDS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ITALIAN WINE BRANDS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ITALIAN WINE reported solid returns over the last few months and may actually be approaching a breakup point.

Wayside Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITALIAN WINE and Wayside Technology

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

The idea behind ITALIAN WINE BRANDS and Wayside Technology Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..