Correlation Between Brown Forman and Vintage Wine

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

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

Diversification Opportunities for Brown Forman and Vintage Wine

0.0

Correlation Coefficient

Brown Forman  Vintage Wine

Pay attention - limited upside

The 3 months correlation between Brown and Vintage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and Vintage Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vintage Wine Estates and Brown Forman 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 Brown Forman are associated (or correlated) with Vintage Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vintage Wine Estates has no effect on the direction of Brown Forman i.e., Brown Forman and Vintage Wine go up and down completely randomly.

Pair Corralation between Brown Forman and Vintage Wine

If you would invest (100.00) in Vintage Wine Estates on May 7, 2025 and sell it today you would earn a total of  100.00  from holding Vintage Wine Estates or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Brown Forman  vs.  Vintage Wine Estates

Brown Forman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brown Forman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vintage Wine Estates

Risk-Adjusted Performance

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 rather sound basic indicators, Vintage Wine is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brown Forman and Vintage Wine

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

The idea behind Brown Forman and Vintage Wine Estates 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.