Correlation Between Vintage Wine and Eastside Distilling

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

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

Diversification Opportunities for Vintage Wine and Eastside Distilling

-0.44

Correlation Coefficient

Vintage Wine  Eastside Distilling

Very good diversification

The 3 months correlation between Vintage and Eastside is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vintage Wine Estates and Eastside Distilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastside Distilling and Vintage Wine 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 Vintage Wine Estates are associated (or correlated) with Eastside Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastside Distilling has no effect on the direction of Vintage Wine i.e., Vintage Wine and Eastside Distilling go up and down completely randomly.

Pair Corralation between Vintage Wine and Eastside Distilling

Considering the 90-day investment horizon Vintage Wine Estates is expected to under-perform the Eastside Distilling. In addition to that, Vintage Wine is 2.59 times more volatile than Eastside Distilling. It trades about -0.09 of its total potential returns per unit of risk. Eastside Distilling is currently generating about 0.12 per unit of volatility. If you would invest  54.00  in Eastside Distilling on September 19, 2024 and sell it today you would earn a total of  26.00  from holding Eastside Distilling or generate 48.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Vintage Wine Estates  vs.  Eastside Distilling

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.

Eastside Distilling

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Vintage Wine and Eastside Distilling

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

The idea behind Vintage Wine Estates and Eastside Distilling 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 Stocks Directory module to find actively traded stocks across global markets.