Correlation Between Vintage Wine and Splash Beverage

Can any of the company-specific risk be diversified away by investing in both Vintage Wine and Splash Beverage 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 Splash Beverage 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 Splash Beverage Group, you can compare the effects of market volatilities on Vintage Wine and Splash Beverage 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 Splash Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vintage Wine and Splash Beverage.

Diversification Opportunities for Vintage Wine and Splash Beverage

0.63

Correlation Coefficient

Vintage Wine  Splash Beverage

Poor diversification

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

Pair Corralation between Vintage Wine and Splash Beverage

Considering the 90-day investment horizon Vintage Wine Estates is expected to under-perform the Splash Beverage. In addition to that, Vintage Wine is 3.54 times more volatile than Splash Beverage Group. It trades about -0.18 of its total potential returns per unit of risk. Splash Beverage Group is currently generating about -0.13 per unit of volatility. 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

Vintage Wine Estates  vs.  Splash Beverage Group

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.

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.

Pair Trading with Vintage Wine and Splash Beverage

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

The idea behind Vintage Wine Estates and Splash Beverage Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.