Correlation Between Odfjell Drilling and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling 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 Odfjell Drilling and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odfjell Drilling and Naked Wines plc, you can compare the effects of market volatilities on Odfjell Drilling 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 Odfjell Drilling with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Naked Wines.
Diversification Opportunities for Odfjell Drilling and Naked Wines
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Odfjell and Naked is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling 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 Odfjell Drilling 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 Odfjell Drilling 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 Odfjell Drilling i.e., Odfjell Drilling and Naked Wines go up and down completely randomly.
Pair Corralation between Odfjell Drilling and Naked Wines
Assuming the 90 days trading horizon Odfjell Drilling is expected to under-perform the Naked Wines. But the stock apears to be less risky and, when comparing its historical volatility, Odfjell Drilling is 2.32 times less risky than Naked Wines. The stock trades about -0.04 of its potential returns per unit of risk. The Naked Wines plc is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Naked Wines plc on December 1, 2024 and sell it today you would earn a total of 1,520 from holding Naked Wines plc or generate 28.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odfjell Drilling vs. Naked Wines plc
Performance |
| Timeline |
| Odfjell Drilling |
| Naked Wines plc |
Odfjell Drilling and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odfjell Drilling and Naked Wines
The main advantage of trading using opposite Odfjell Drilling and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell Drilling 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.| Odfjell Drilling vs. Melia Hotels | Odfjell Drilling vs. Dolly Varden Silver | Odfjell Drilling vs. Atalaya Mining | Odfjell Drilling vs. Resolute Mining Limited |
| Naked Wines vs. JD Sports Fashion | Naked Wines vs. Catalyst Media Group | Naked Wines vs. Liontrust Asset Management | Naked Wines vs. Impax Asset Management |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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