Correlation Between Vodka Brands and Enlightify

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

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

Diversification Opportunities for Vodka Brands and Enlightify

-0.6

Correlation Coefficient

Vodka Brands  Enlightify

Excellent diversification

The 3 months correlation between Vodka and Enlightify is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Enlightify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlightify and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with Enlightify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlightify has no effect on the direction of Vodka Brands i.e., Vodka Brands and Enlightify go up and down completely randomly.

Pair Corralation between Vodka Brands and Enlightify

Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 0.74 times more return on investment than Enlightify. However, Vodka Brands Corp is 1.36 times less risky than Enlightify. It trades about 0.14 of its potential returns per unit of risk. Enlightify is currently generating about -0.15 per unit of risk. If you would invest  107.00  in Vodka Brands Corp on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Vodka Brands Corp or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Vodka Brands Corp  vs.  Enlightify

Vodka Brands Corp

Risk-Adjusted Performance

9 of 100

OK

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

Enlightify

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vodka Brands and Enlightify

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

The idea behind Vodka Brands Corp and Enlightify 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..