Correlation Between Diageo PLC and Grand Vision

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

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

Diversification Opportunities for Diageo PLC and Grand Vision

0.16

Correlation Coefficient

Diageo PLC  Grand Vision

Average diversification

The 3 months correlation between Diageo and Grand is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC and Grand Vision Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Vision Media and Diageo PLC 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 Diageo PLC are associated (or correlated) with Grand Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Vision Media has no effect on the direction of Diageo PLC i.e., Diageo PLC and Grand Vision go up and down completely randomly.

Pair Corralation between Diageo PLC and Grand Vision

Assuming the 90 days trading horizon Diageo PLC is expected to generate 0.4 times more return on investment than Grand Vision. However, Diageo PLC is 2.51 times less risky than Grand Vision. It trades about 0.0 of its potential returns per unit of risk. Grand Vision Media is currently generating about -0.12 per unit of risk. If you would invest  249,750  in Diageo PLC on September 25, 2024 and sell it today you would lose (400.00) from holding Diageo PLC or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Diageo PLC  vs.  Grand Vision Media

Diageo PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diageo PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Diageo PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grand Vision Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Vision Media 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.

Pair Trading with Diageo PLC and Grand Vision

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

The idea behind Diageo PLC and Grand Vision Media 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.