Correlation Between Southern California and Fevertree Drinks

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

By analyzing existing cross correlation between Southern California Gas and Fevertree Drinks Plc, you can compare the effects of market volatilities on Southern California and Fevertree Drinks 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 Southern California with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Fevertree Drinks.

Diversification Opportunities for Southern California and Fevertree Drinks

0.0

Correlation Coefficient

Southern California  Fevertree Drinks

Pay attention - limited upside

The 3 months correlation between Southern and Fevertree is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Gas and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Southern California 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 Southern California Gas are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Southern California i.e., Southern California and Fevertree Drinks go up and down completely randomly.

Pair Corralation between Southern California and Fevertree Drinks

If you would invest  828.00  in Fevertree Drinks Plc on December 22, 2024 and sell it today you would earn a total of  120.00  from holding Fevertree Drinks Plc or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Southern California Gas  vs.  Fevertree Drinks Plc

Southern California Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern California Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Southern California is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fevertree Drinks Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fevertree Drinks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern California and Fevertree Drinks

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

The idea behind Southern California Gas and Fevertree Drinks Plc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.