Add red wine vinegar, sherry vinegar, Dijon mustard, honey, water, salt, and freshly cracked black pepper to blender or food processor and pulse until homogenous. Alternatively, add ingredients to mixing bowl and whisk.
With blender or food processor running, or by hand with a whisk, slowly drizzle in olive oil and canola oil drop by drop and then continuously in a steady stream until emulsified.
Transfer dressing to small bowl or container and fold in shallots, basil, and tarragon. Will keep covered in the refrigerator for up to 3 days.