Correlation Between Virgin Wines and Antofagasta PLC

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

By analyzing existing cross correlation between Virgin Wines UK and Antofagasta PLC, you can compare the effects of market volatilities on Virgin Wines and Antofagasta PLC 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 Virgin Wines with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Antofagasta PLC.

Diversification Opportunities for Virgin Wines and Antofagasta PLC

0.82

Correlation Coefficient

Virgin Wines  Antofagasta PLC

Very poor diversification

The 3 months correlation between Virgin and Antofagasta is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Virgin Wines 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 Virgin Wines UK are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Virgin Wines i.e., Virgin Wines and Antofagasta PLC go up and down completely randomly.

Pair Corralation between Virgin Wines and Antofagasta PLC

Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Antofagasta PLC. In addition to that, Virgin Wines is 1.0 times more volatile than Antofagasta PLC. It trades about -0.01 of its total potential returns per unit of risk. Antofagasta PLC is currently generating about 0.03 per unit of volatility. If you would invest  142,083  in Antofagasta PLC on September 23, 2024 and sell it today you would earn a total of  19,267  from holding Antofagasta PLC or generate 13.56% return on investment over 90 days.

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

Virgin Wines UK  vs.  Antofagasta PLC

Virgin Wines UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virgin Wines UK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Virgin Wines and Antofagasta PLC

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

The idea behind Virgin Wines UK and Antofagasta 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 Transaction History module to view history of all your transactions and understand their impact on performance.