Correlation Between Axway Software and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Axway Software 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 Axway Software and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axway Software SA and Naked Wines plc, you can compare the effects of market volatilities on Axway Software 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 Axway Software with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Naked Wines.
Diversification Opportunities for Axway Software and Naked Wines
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axway and Naked is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA 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 Axway Software 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 Axway Software SA 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 Axway Software i.e., Axway Software and Naked Wines go up and down completely randomly.
Pair Corralation between Axway Software and Naked Wines
Assuming the 90 days trading horizon Axway Software SA is expected to generate 0.25 times more return on investment than Naked Wines. However, Axway Software SA is 4.03 times less risky than Naked Wines. It trades about -0.17 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.35 per unit of risk. If you would invest 2,740 in Axway Software SA on October 11, 2024 and sell it today you would lose (60.00) from holding Axway Software SA or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Axway Software SA vs. Naked Wines plc
Performance |
| Timeline |
| Axway Software SA |
| Naked Wines plc |
Axway Software and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Naked Wines
The main advantage of trading using opposite Axway Software and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software 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.| Axway Software vs. American Homes 4 | Axway Software vs. Evolution Gaming Group | Axway Software vs. alstria office REIT AG | Axway Software vs. Premier Foods PLC |
| Naked Wines vs. Dairy Farm International | Naked Wines vs. Batm Advanced Communications | Naked Wines vs. Cairo Communication SpA | Naked Wines vs. Axway Software SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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