Correlation Between MWIG40 and Marie Brizard

Can any of the company-specific risk be diversified away by investing in both MWIG40 and Marie Brizard 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 MWIG40 and Marie Brizard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MWIG40 and Marie Brizard Wine, you can compare the effects of market volatilities on MWIG40 and Marie Brizard 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 MWIG40 with a short position of Marie Brizard. Check out your portfolio center. Please also check ongoing floating volatility patterns of MWIG40 and Marie Brizard.

Diversification Opportunities for MWIG40 and Marie Brizard

-0.88

Correlation Coefficient

MWIG40  Marie Brizard

Pay attention - limited upside

The 3 months correlation between MWIG40 and Marie is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding MWIG40 and Marie Brizard Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marie Brizard Wine and MWIG40 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 MWIG40 are associated (or correlated) with Marie Brizard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marie Brizard Wine has no effect on the direction of MWIG40 i.e., MWIG40 and Marie Brizard go up and down completely randomly.

Pair Corralation between MWIG40 and Marie Brizard

Assuming the 90 days trading horizon MWIG40 is expected to generate 0.6 times more return on investment than Marie Brizard. However, MWIG40 is 1.67 times less risky than Marie Brizard. It trades about 0.27 of its potential returns per unit of risk. Marie Brizard Wine is currently generating about -0.21 per unit of risk. If you would invest  612,232  in MWIG40 on December 29, 2024 and sell it today you would earn a total of  116,637  from holding MWIG40 or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

MWIG40  vs.  Marie Brizard Wine

Pair Trading with MWIG40 and Marie Brizard

The main advantage of trading using opposite MWIG40 and Marie Brizard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MWIG40 position performs unexpectedly, Marie Brizard 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 Marie Brizard will offset losses from the drop in Marie Brizard's long position.

The idea behind MWIG40 and Marie Brizard Wine 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.