Correlation Between South Beach and Duckhorn Portfolio

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

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

Diversification Opportunities for South Beach and Duckhorn Portfolio

0.08

Correlation Coefficient

South Beach  Duckhorn Portfolio

Significant diversification

The 3 months correlation between South and Duckhorn is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding South Beach Spirits and Duckhorn Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duckhorn Portfolio and South Beach 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 South Beach Spirits are associated (or correlated) with Duckhorn Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duckhorn Portfolio has no effect on the direction of South Beach i.e., South Beach and Duckhorn Portfolio go up and down completely randomly.

Pair Corralation between South Beach and Duckhorn Portfolio

Given the investment horizon of 90 days South Beach Spirits is expected to generate 4.29 times more return on investment than Duckhorn Portfolio. However, South Beach is 4.29 times more volatile than Duckhorn Portfolio. It trades about 0.12 of its potential returns per unit of risk. Duckhorn Portfolio is currently generating about 0.12 per unit of risk. If you would invest  0.02  in South Beach Spirits on September 16, 2024 and sell it today you would lose (0.01) from holding South Beach Spirits or give up 50.0% of portfolio value over 90 days.

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

South Beach Spirits  vs.  Duckhorn Portfolio

South Beach Spirits

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in South Beach Spirits are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, South Beach unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with South Beach and Duckhorn Portfolio

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

The idea behind South Beach Spirits and Duckhorn Portfolio 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.