Correlation Between RB Global and Wildpack Beverage

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

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

Diversification Opportunities for RB Global and Wildpack Beverage

-0.4

Correlation Coefficient

RB Global  Wildpack Beverage

Very good diversification

The 3 months correlation between RBA and Wildpack is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and Wildpack Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildpack Beverage and RB Global 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 RB Global are associated (or correlated) with Wildpack Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildpack Beverage has no effect on the direction of RB Global i.e., RB Global and Wildpack Beverage go up and down completely randomly.

Pair Corralation between RB Global and Wildpack Beverage

Considering the 90-day investment horizon RB Global is expected to generate 0.12 times more return on investment than Wildpack Beverage. However, RB Global is 8.2 times less risky than Wildpack Beverage. It trades about 0.5 of its potential returns per unit of risk. Wildpack Beverage is currently generating about -0.22 per unit of risk. If you would invest  8,540  in RB Global on September 5, 2024 and sell it today you would earn a total of  1,279  from holding RB Global or generate 14.98% return on investment over 90 days.

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

RB Global  vs.  Wildpack Beverage

RB Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RB Global are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, RB Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Wildpack Beverage

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with RB Global and Wildpack Beverage

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

The idea behind RB Global and Wildpack Beverage 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.