Correlation Between Virgin Wines and Panther Metals

Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Panther Metals 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 Panther Metals 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 Panther Metals PLC, you can compare the effects of market volatilities on Virgin Wines and Panther Metals 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 Panther Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Panther Metals.

Diversification Opportunities for Virgin Wines and Panther Metals

0.67

Correlation Coefficient

Virgin Wines  Panther Metals

Poor diversification

The 3 months correlation between Virgin and Panther is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Panther Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panther Metals 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 Panther Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panther Metals PLC has no effect on the direction of Virgin Wines i.e., Virgin Wines and Panther Metals go up and down completely randomly.

Pair Corralation between Virgin Wines and Panther Metals

Assuming the 90 days trading horizon Virgin Wines UK is expected to generate 0.26 times more return on investment than Panther Metals. However, Virgin Wines UK is 3.87 times less risky than Panther Metals. It trades about -0.13 of its potential returns per unit of risk. Panther Metals PLC is currently generating about -0.11 per unit of risk. If you would invest  3,600  in Virgin Wines UK on October 27, 2024 and sell it today you would lose (450.00) from holding Virgin Wines UK or give up 12.5% of portfolio value over 90 days.

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

Virgin Wines UK  vs.  Panther Metals 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Panther Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panther Metals PLC 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Virgin Wines and Panther Metals

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

The idea behind Virgin Wines UK and Panther Metals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.