Correlation Between Virgin Wines and Dolly Varden

Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Dolly Varden 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 Virgin Wines and Dolly Varden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Virgin Wines UK and Dolly Varden Silver, you can compare the effects of market volatilities on Virgin Wines and Dolly Varden 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 Virgin Wines with a short position of Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Dolly Varden.

Diversification Opportunities for Virgin Wines and Dolly Varden

-0.19

Correlation Coefficient

Virgin Wines  Dolly Varden

Good diversification

The 3 months correlation between Virgin and Dolly is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver and Virgin Wines 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 Virgin Wines UK are associated (or correlated) with Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Virgin Wines i.e., Virgin Wines and Dolly Varden go up and down completely randomly.

Pair Corralation between Virgin Wines and Dolly Varden

Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Dolly Varden. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 2.79 times less risky than Dolly Varden. The stock trades about -0.2 of its potential returns per unit of risk. The Dolly Varden Silver is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Dolly Varden Silver on September 25, 2024 and sell it today you would lose (13.00) from holding Dolly Varden Silver or give up 11.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Virgin Wines UK  vs.  Dolly Varden Silver

Virgin Wines UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virgin Wines UK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Virgin Wines and Dolly Varden

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

The idea behind Virgin Wines UK and Dolly Varden Silver 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.