Correlation Between Vastned Retail and ITALIAN WINE

Can any of the company-specific risk be diversified away by investing in both Vastned Retail and ITALIAN 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 Vastned Retail and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vastned Retail NV and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Vastned Retail and ITALIAN 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 Vastned Retail with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and ITALIAN WINE.

Diversification Opportunities for Vastned Retail and ITALIAN WINE

0.53

Correlation Coefficient

Vastned Retail  ITALIAN WINE

Very weak diversification

The 3 months correlation between Vastned and ITALIAN is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Vastned Retail i.e., Vastned Retail and ITALIAN WINE go up and down completely randomly.

Pair Corralation between Vastned Retail and ITALIAN WINE

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the ITALIAN WINE. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 3.28 times less risky than ITALIAN WINE. The stock trades about -0.04 of its potential returns per unit of risk. The ITALIAN WINE BRANDS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,120  in ITALIAN WINE BRANDS on September 13, 2024 and sell it today you would earn a total of  110.00  from holding ITALIAN WINE BRANDS or generate 5.19% return on investment over 90 days.

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

Vastned Retail NV  vs.  ITALIAN WINE BRANDS

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITALIAN WINE BRANDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ITALIAN WINE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vastned Retail and ITALIAN WINE

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

The idea behind Vastned Retail NV and ITALIAN WINE BRANDS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.