Correlation Between Duckhorn Portfolio and Fresh Grapes

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

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

Diversification Opportunities for Duckhorn Portfolio and Fresh Grapes

0.35

Correlation Coefficient

Duckhorn Portfolio  Fresh Grapes

Weak diversification

The 3 months correlation between Duckhorn and Fresh is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Duckhorn Portfolio and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC and Duckhorn Portfolio 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 Duckhorn Portfolio are associated (or correlated) with Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Duckhorn Portfolio i.e., Duckhorn Portfolio and Fresh Grapes go up and down completely randomly.

Pair Corralation between Duckhorn Portfolio and Fresh Grapes

Given the investment horizon of 90 days Duckhorn Portfolio is expected to generate 5.17 times less return on investment than Fresh Grapes. But when comparing it to its historical volatility, Duckhorn Portfolio is 1.32 times less risky than Fresh Grapes. It trades about 0.01 of its potential returns per unit of risk. Fresh Grapes LLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Fresh Grapes LLC on September 12, 2024 and sell it today you would earn a total of  13.00  from holding Fresh Grapes LLC or generate 24.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Duckhorn Portfolio  vs.  Fresh Grapes LLC

Duckhorn Portfolio

Risk-Adjusted Performance

9 of 100

OK

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

Fresh Grapes LLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Grapes LLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fresh Grapes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duckhorn Portfolio and Fresh Grapes

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

The idea behind Duckhorn Portfolio and Fresh Grapes LLC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.