Correlation Between Duckhorn Portfolio and Splash Beverage

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

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

Diversification Opportunities for Duckhorn Portfolio and Splash Beverage

-0.46

Correlation Coefficient

Duckhorn Portfolio  Splash Beverage

Very good diversification

The 3 months correlation between Duckhorn and Splash is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Duckhorn Portfolio and Splash Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splash Beverage Group and Duckhorn Portfolio 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 Duckhorn Portfolio are associated (or correlated) with Splash Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splash Beverage Group has no effect on the direction of Duckhorn Portfolio i.e., Duckhorn Portfolio and Splash Beverage go up and down completely randomly.

Pair Corralation between Duckhorn Portfolio and Splash Beverage

Given the investment horizon of 90 days Duckhorn Portfolio is expected to generate 2.54 times more return on investment than Splash Beverage. However, Duckhorn Portfolio is 2.54 times more volatile than Splash Beverage Group. It trades about 0.12 of its potential returns per unit of risk. Splash Beverage Group is currently generating about -0.12 per unit of risk. If you would invest  593.00  in Duckhorn Portfolio on September 19, 2024 and sell it today you would earn a total of  516.00  from holding Duckhorn Portfolio or generate 87.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Duckhorn Portfolio  vs.  Splash Beverage Group

Duckhorn Portfolio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duckhorn Portfolio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duckhorn Portfolio sustained solid returns over the last few months and may actually be approaching a breakup point.

Splash Beverage Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splash Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Duckhorn Portfolio and Splash Beverage

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

The idea behind Duckhorn Portfolio and Splash Beverage Group 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.