Correlation Between MT Bank and Naked Wines
Can any of the company-specific risk be diversified away by investing in both MT Bank and Naked Wines 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 MT Bank and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Naked Wines plc, you can compare the effects of market volatilities on MT Bank and Naked Wines 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 MT Bank with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Naked Wines.
Diversification Opportunities for MT Bank and Naked Wines
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0JW2 and Naked is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc and MT Bank 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 MT Bank Corp are associated (or correlated) with Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of MT Bank i.e., MT Bank and Naked Wines go up and down completely randomly.
Pair Corralation between MT Bank and Naked Wines
Assuming the 90 days trading horizon MT Bank Corp is expected to under-perform the Naked Wines. But the stock apears to be less risky and, when comparing its historical volatility, MT Bank Corp is 1.99 times less risky than Naked Wines. The stock trades about -0.22 of its potential returns per unit of risk. The Naked Wines plc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Naked Wines plc on September 13, 2024 and sell it today you would lose (200.00) from holding Naked Wines plc or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MT Bank Corp vs. Naked Wines plc
Performance |
| Timeline |
| MT Bank Corp |
| Naked Wines plc |
MT Bank and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Naked Wines
The main advantage of trading using opposite MT Bank and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| MT Bank vs. Charter Communications Cl | MT Bank vs. Schweiter Technologies AG | MT Bank vs. Gamma Communications PLC | MT Bank vs. Albion Technology General |
| Naked Wines vs. Ondine Biomedical | Naked Wines vs. Europa Metals | Naked Wines vs. Revolution Beauty Group | Naked Wines vs. Moonpig Group PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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