Wine is uncorrelated with traditional assets. It’s official.

Sources:  Liv-ex, investing.com. Correlation calculatedusing Pearson’s Product Moment Correlation Formula. Data from 01/01/2019 to 01/01/2024.

To prove this, WineFi’s data science team calculated the correlation coefficient for the last 5 years between the monthly returns on wine and a selection of other traditional assets.

For the uninitiated, in this image the coefficient stated is a measure of how closely the returns of the two assets are correlated.

The closer to 1, the more the behaviour of the two variables is correlated. When one goes down, the other goes down. As you can imagine, this isn’t conducive to a diversified portfolio.

The closer to -1, the more the behaviour is negatively correlated. When one goes up, the other goes down. Maybe counter-intuitively, this also isn’t ideal. If your portfolio is perfectly balanced and negatively correlated then your net return will always be 0.

As evidenced, the Liv-ex 100 and 1000 are weakly correlated (in either direction) with traditional assets, meaning that they act as strong diversifiers for an investment portfolio.

This highlights the potential benefit to investors of including of fine wine in an investment portfolio. To put it simply the fine wine market does not follow the same patterns as many traditional assets – so allocating a part of a balanced portfolio to fine wine gives you protection against the market fluctuations of traditional assets.