Correlation Between Fevertree Drinks and Safestore Holdings

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Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Safestore Holdings 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 Fevertree Drinks and Safestore Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Safestore Holdings Plc, you can compare the effects of market volatilities on Fevertree Drinks and Safestore Holdings 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 Fevertree Drinks with a short position of Safestore Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Safestore Holdings.

Diversification Opportunities for Fevertree Drinks and Safestore Holdings

0.82
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Fevertree Drinks and Safestore Holdings

Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 1.06 times more return on investment than Safestore Holdings. However, Fevertree Drinks is 1.06 times more volatile than Safestore Holdings Plc. It trades about -0.07 of its potential returns per unit of risk. Safestore Holdings Plc is currently generating about -0.27 per unit of risk. If you would invest  76,978  in Fevertree Drinks Plc on September 15, 2024 and sell it today you would lose (6,078) from holding Fevertree Drinks Plc or give up 7.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.48%
ValuesDaily Returns

Fevertree Drinks Plc  vs.  Safestore Holdings Plc

 Performance 
       Timeline  
Fevertree Drinks Plc 

Risk-Adjusted Performance

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Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.
Safestore Holdings Plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Safestore Holdings 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fevertree Drinks and Safestore Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fevertree Drinks and Safestore Holdings

The main advantage of trading using opposite Fevertree Drinks and Safestore Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Safestore Holdings 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 Safestore Holdings will offset losses from the drop in Safestore Holdings' long position.
The idea behind Fevertree Drinks Plc and Safestore Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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