Correlation Between Splash Beverage and Vintage Wine

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

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

Diversification Opportunities for Splash Beverage and Vintage Wine

0.63

Correlation Coefficient

Splash Beverage  Vintage Wine

Poor diversification

The 3 months correlation between Splash and Vintage is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Splash Beverage Group and Vintage Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vintage Wine Estates and Splash Beverage 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 Splash Beverage Group are associated (or correlated) with Vintage Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vintage Wine Estates has no effect on the direction of Splash Beverage i.e., Splash Beverage and Vintage Wine go up and down completely randomly.

Pair Corralation between Splash Beverage and Vintage Wine

Given the investment horizon of 90 days Splash Beverage Group is expected to generate 0.28 times more return on investment than Vintage Wine. However, Splash Beverage Group is 3.54 times less risky than Vintage Wine. It trades about -0.13 of its potential returns per unit of risk. Vintage Wine Estates is currently generating about -0.18 per unit of risk. If you would invest  25.00  in Splash Beverage Group on September 20, 2024 and sell it today you would lose (10.00) from holding Splash Beverage Group or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	17.46%
Values	Daily Returns

Splash Beverage Group  vs.  Vintage Wine Estates

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.

Vintage Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vintage Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Splash Beverage and Vintage Wine

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

The idea behind Splash Beverage Group and Vintage Wine Estates 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.