Correlation Between 91324PEN8 and Fevertree Drinks

Can any of the company-specific risk be diversified away by investing in both 91324PEN8 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 91324PEN8 and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNH 515 15 OCT 25 and Fevertree Drinks Plc, you can compare the effects of market volatilities on 91324PEN8 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 91324PEN8 with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of 91324PEN8 and Fevertree Drinks.

Diversification Opportunities for 91324PEN8 and Fevertree Drinks

0.53

Correlation Coefficient

91324PEN8  Fevertree Drinks

Very weak diversification

The 3 months correlation between 91324PEN8 and Fevertree is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding UNH 515 15 OCT 25 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 91324PEN8 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 UNH 515 15 OCT 25 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 91324PEN8 i.e., 91324PEN8 and Fevertree Drinks go up and down completely randomly.

Pair Corralation between 91324PEN8 and Fevertree Drinks

Assuming the 90 days trading horizon UNH 515 15 OCT 25 is expected to generate 0.08 times more return on investment than Fevertree Drinks. However, UNH 515 15 OCT 25 is 12.39 times less risky than Fevertree Drinks. It trades about 0.0 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.02 per unit of risk. If you would invest  10,123  in UNH 515 15 OCT 25 on September 20, 2024 and sell it today you would lose (67.00) from holding UNH 515 15 OCT 25 or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.79%
Values	Daily Returns

UNH 515 15 OCT 25  vs.  Fevertree Drinks Plc

UNH 515 15

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days UNH 515 15 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 91324PEN8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with 91324PEN8 and Fevertree Drinks

The main advantage of trading using opposite 91324PEN8 and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 91324PEN8 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 UNH 515 15 OCT 25 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.