Correlation Between Pernod Ricard and Splash Beverage

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

By analyzing existing cross correlation between Pernod Ricard SA and Splash Beverage Group, you can compare the effects of market volatilities on Pernod Ricard and Splash Beverage 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 Pernod Ricard with a short position of Splash Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Splash Beverage.

Diversification Opportunities for Pernod Ricard and Splash Beverage

0.78

Correlation Coefficient

Pernod Ricard  Splash Beverage

Poor diversification

The 3 months correlation between Pernod and Splash is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Splash Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splash Beverage Group and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Splash Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splash Beverage Group has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Splash Beverage go up and down completely randomly.

Pair Corralation between Pernod Ricard and Splash Beverage

Assuming the 90 days horizon Pernod Ricard SA is expected to generate 0.38 times more return on investment than Splash Beverage. However, Pernod Ricard SA is 2.6 times less risky than Splash Beverage. It trades about -0.11 of its potential returns per unit of risk. Splash Beverage Group is currently generating about -0.15 per unit of risk. If you would invest  2,760  in Pernod Ricard SA on September 14, 2024 and sell it today you would lose (383.00) from holding Pernod Ricard SA or give up 13.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pernod Ricard SA  vs.  Splash Beverage Group

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pernod Ricard SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Splash Beverage Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splash Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Pernod Ricard and Splash Beverage

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

The idea behind Pernod Ricard SA and Splash Beverage 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.