Correlation Between MGP Ingredients and Remy Cointreau

Can any of the company-specific risk be diversified away by investing in both MGP Ingredients and Remy Cointreau 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 MGP Ingredients and Remy Cointreau into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGP Ingredients and Remy Cointreau SA, you can compare the effects of market volatilities on MGP Ingredients and Remy Cointreau 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 MGP Ingredients with a short position of Remy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGP Ingredients and Remy Cointreau.

Diversification Opportunities for MGP Ingredients and Remy Cointreau

0.87

Correlation Coefficient

MGP Ingredients  Remy Cointreau

Very poor diversification

The 3 months correlation between MGP and Remy is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA and MGP Ingredients 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 MGP Ingredients are associated (or correlated) with Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of MGP Ingredients i.e., MGP Ingredients and Remy Cointreau go up and down completely randomly.

Pair Corralation between MGP Ingredients and Remy Cointreau

Given the investment horizon of 90 days MGP Ingredients is expected to under-perform the Remy Cointreau. But the stock apears to be less risky and, when comparing its historical volatility, MGP Ingredients is 1.05 times less risky than Remy Cointreau. The stock trades about -0.03 of its potential returns per unit of risk. The Remy Cointreau SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Remy Cointreau SA on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Remy Cointreau SA or generate 1.81% return on investment over 90 days.

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

MGP Ingredients  vs.  Remy Cointreau SA

MGP Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Remy Cointreau SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MGP Ingredients and Remy Cointreau

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

The idea behind MGP Ingredients and Remy Cointreau SA 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.