Correlation Between Innovation Beverage and Fresh Grapes

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

By analyzing existing cross correlation between Innovation Beverage Group and Fresh Grapes LLC, you can compare the effects of market volatilities on Innovation Beverage and Fresh Grapes 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 Innovation Beverage with a short position of Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovation Beverage and Fresh Grapes.

Diversification Opportunities for Innovation Beverage and Fresh Grapes

0.0

Correlation Coefficient

Innovation Beverage  Fresh Grapes

Pay attention - limited upside

The 3 months correlation between Innovation and Fresh is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovation Beverage Group and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC and Innovation Beverage 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 Innovation Beverage Group are associated (or correlated) with Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Innovation Beverage i.e., Innovation Beverage and Fresh Grapes go up and down completely randomly.

Pair Corralation between Innovation Beverage and Fresh Grapes

Considering the 90-day investment horizon Innovation Beverage Group is expected to under-perform the Fresh Grapes. In addition to that, Innovation Beverage is 1.21 times more volatile than Fresh Grapes LLC. It trades about -0.03 of its total potential returns per unit of risk. Fresh Grapes LLC is currently generating about -0.03 per unit of volatility. If you would invest  90.00  in Fresh Grapes LLC on September 29, 2024 and sell it today you would lose (34.00) from holding Fresh Grapes LLC or give up 37.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Innovation Beverage Group  vs.  Fresh Grapes LLC

Innovation Beverage

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Innovation Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Innovation Beverage and Fresh Grapes

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

The idea behind Innovation Beverage Group and Fresh Grapes LLC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.