What’s Behind Diageo Stock’s Recent Rise?

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Diageo stock (NYSE: DEO) is up almost 6% in the last one month, underperforming the S&P 500 which increased 6.8% during this period. In the last one week the stock has managed to marginally outperform the broader market (2.5% vs 2%). The recent rise in stock price was driven mainly by two factors. Firstly, the company’s non-executive Chairman ought additional shares of DEO and increased his shareholding to 9.8%. Additionally, Diageo is investing $75 million into building its first whiskey distillery in China. The construction of the 66,000 meter facility is expected to be completed in 2023. The distillery will produce Diageo’s first Chinese-origin, single malt whiskey targeting the country’s premium drinkers. Thus, expansion in China and confidence exuded by insiders by buying more shares has enthused investors. Additionally, with pubs and restaurants operating at a near normal level, there is positive sentiment related to the stock.

Now, is DEO stock set to rise further or could we expect some correction? We believe that there is a 65% chance of a rise in DEO stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on DEO Stock Chance of Rise.

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Twenty-One Day: DEO 5.9%, vs. S&P500 6.8%; Underperformed market

(10% likelihood event; 65% probability of rise over next 21 days)

  • DEO stock increased 5.9% the last twenty-one trading days (one month), compared to a broader market (S&P500) rise of 6.8%
  • A change of 5.9% or more over twenty-one trading days is a 10% likelihood event, which has occurred 263 times out of 2516 in the last 10 years
  • Of these 263 instances, the stock has seen a positive movement over the next twenty-one trading days on 170 occasions
  • This points to a 65% probability for the stock rising over the next twenty-one trading days

Ten Day: DEO 1.6%, vs. S&P500 3.4%; Underperformed market

(30% likelihood event; 52% probability of rise over next 10 days)

  • DEO stock increased 1.6% over the last ten trading days (two weeks), compared to broader market (S&P500) rise of 3.4%
  • A change of 1.6% or more over ten trading days is a 30% likelihood event, which has occurred 747 times out of 2516 in the last 10 years
  • Of these 747 instances, the stock has seen a positive movement over the next ten trading days on 388 occasions
  • This points to a 52% probability for the stock rising over the next ten trading days

Five Day: DEO 2.5%, vs. S&P500 2%; Outperformed market

(20% likelihood event; 53% probability of rise over next five days)

  • DEO stock increased 2.5% over a five-day trading period ending 11/05/2021, compared to the broader market (S&P500) rise of 2%
  • A change of 2.5% or more over five trading days (one week) is a 20% likelihood event, which has occurred 501 times out of 2516 in the last ten years
  • Of these 501 instances, the stock has seen a positive movement over the next five trading days on 265 occasions
  • This points to a 53% probability for the stock rising over the next five trading days

 

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