Correlation Between Norion Bank and Viva Wine

Can any of the company-specific risk be diversified away by investing in both Norion Bank and Viva Wine 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 Norion Bank and Viva Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Norion Bank and Viva Wine

0.43

Correlation Coefficient

Norion Bank  Viva Wine

Very weak diversification

The 3 months correlation between Norion and Viva is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Norion Bank and Viva Wine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Wine Group and Norion Bank 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 Norion Bank are associated (or correlated) with Viva Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Wine Group has no effect on the direction of Norion Bank i.e., Norion Bank and Viva Wine go up and down completely randomly.

Pair Corralation between Norion Bank and Viva Wine

Assuming the 90 days trading horizon Norion Bank is expected to generate 1.21 times more return on investment than Viva Wine. However, Norion Bank is 1.21 times more volatile than Viva Wine Group. It trades about 0.01 of its potential returns per unit of risk. Viva Wine Group is currently generating about -0.11 per unit of risk. If you would invest  4,030  in Norion Bank on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Norion Bank or generate 0.25% return on investment over 90 days.

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

Norion Bank  vs.  Viva Wine Group

Norion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Norion Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Viva Wine Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viva Wine Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Norion Bank and Viva Wine

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

The idea behind Norion Bank and Viva Wine 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..