Correlation Between Pool and Duckhorn Portfolio

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

By analyzing existing cross correlation between Pool Corporation and Duckhorn Portfolio, you can compare the effects of market volatilities on Pool and Duckhorn Portfolio 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 Pool with a short position of Duckhorn Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Duckhorn Portfolio.

Diversification Opportunities for Pool and Duckhorn Portfolio

-0.28

Correlation Coefficient

Pool  Duckhorn Portfolio

Very good diversification

The 3 months correlation between Pool and Duckhorn is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Duckhorn Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duckhorn Portfolio and Pool 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 Pool Corporation are associated (or correlated) with Duckhorn Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duckhorn Portfolio has no effect on the direction of Pool i.e., Pool and Duckhorn Portfolio go up and down completely randomly.

Pair Corralation between Pool and Duckhorn Portfolio

Given the investment horizon of 90 days Pool Corporation is expected to generate 1.02 times more return on investment than Duckhorn Portfolio. However, Pool is 1.02 times more volatile than Duckhorn Portfolio. It trades about 0.03 of its potential returns per unit of risk. Duckhorn Portfolio is currently generating about -0.07 per unit of risk. If you would invest  31,037  in Pool Corporation on June 21, 2024 and sell it today you would earn a total of  6,172  from holding Pool Corporation or generate 19.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pool Corp.  vs.  Duckhorn Portfolio

Pool

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Pool may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Duckhorn Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duckhorn Portfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pool and Duckhorn Portfolio

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

The idea behind Pool Corporation and Duckhorn Portfolio 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 CEOs Directory module to screen CEOs from public companies around the world.