Correlation Between Crimson Wine and Eastside Distilling
Can any of the company-specific risk be diversified away by investing in both Crimson 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 Crimson 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 Crimson Wine and Eastside Distilling, you can compare the effects of market volatilities on Crimson 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 Crimson Wine with a short position of Eastside Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Eastside Distilling.
Diversification Opportunities for Crimson Wine and Eastside Distilling
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Crimson and Eastside is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Eastside Distilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastside Distilling and Crimson 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 Crimson Wine 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 Crimson Wine i.e., Crimson Wine and Eastside Distilling go up and down completely randomly.
Pair Corralation between Crimson Wine and Eastside Distilling
Given the investment horizon of 90 days Crimson Wine is expected to generate 6.34 times less return on investment than Eastside Distilling. But when comparing it to its historical volatility, Crimson Wine is 5.33 times less risky than Eastside Distilling. It trades about 0.07 of its potential returns per unit of risk. Eastside Distilling is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 98.00 in Eastside Distilling on January 26, 2024 and sell it today you would earn a total of 7.00 from holding Eastside Distilling or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crimson Wine vs. Eastside Distilling
Performance |
| Timeline |
| Crimson Wine |
| Eastside Distilling |
Crimson Wine and Eastside Distilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crimson Wine and Eastside Distilling
The main advantage of trading using opposite Crimson Wine and Eastside Distilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson 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 Crimson Wine 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.| Eastside Distilling vs. Andrew Peller Limited | Eastside Distilling vs. Naked Wines plc | Eastside Distilling vs. Willamette Valley Vineyards | Eastside Distilling vs. The Tinley Beverage |
Check out your portfolio center.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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |