Correlation Between Fevertree Drinks and Global Ship

Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Global Ship 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 Fevertree Drinks and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fevertree Drinks Plc and Global Ship Lease, you can compare the effects of market volatilities on Fevertree Drinks and Global Ship 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 Fevertree Drinks with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Global Ship.

Diversification Opportunities for Fevertree Drinks and Global Ship

0.29

Correlation Coefficient

Fevertree Drinks  Global Ship

Modest diversification

The 3 months correlation between Fevertree and Global is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Global Ship go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Global Ship

Assuming the 90 days horizon Fevertree Drinks is expected to generate 2.84 times less return on investment than Global Ship. In addition to that, Fevertree Drinks is 4.5 times more volatile than Global Ship Lease. It trades about 0.01 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.07 per unit of volatility. If you would invest  2,160  in Global Ship Lease on March 7, 2024 and sell it today you would earn a total of  640.00  from holding Global Ship Lease or generate 29.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.36%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Global Ship Lease

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Global Ship Lease

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Fevertree Drinks and Global Ship

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

The idea behind Fevertree Drinks Plc and Global Ship Lease 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.