Correlation Between GoldMining and Naked Wines
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Naked Wines plc, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Naked Wines.
Diversification Opportunities for GoldMining and Naked Wines
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GoldMining and Naked is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Naked Wines go up and down completely randomly.
Pair Corralation between GoldMining and Naked Wines
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Naked Wines. But the stock apears to be less risky and, when comparing its historical volatility, GoldMining is 1.14 times less risky than Naked Wines. The stock trades about -0.02 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 5,200 in Naked Wines plc on November 28, 2024 and sell it today you would earn a total of 940.00 from holding Naked Wines plc or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.4% |
| Values | Daily Returns |
GoldMining vs. Naked Wines plc
Performance |
| Timeline |
| GoldMining |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Naked Wines plc |
GoldMining and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Naked Wines
The main advantage of trading using opposite GoldMining and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. Liontrust Asset Management | GoldMining vs. Livermore Investments Group | GoldMining vs. BlackRock Frontiers Investment | GoldMining vs. Ruffer Investment |
| Naked Wines vs. Bellevue Healthcare Trust | Naked Wines vs. Optima Health plc | Naked Wines vs. Cardinal Health | Naked Wines vs. Invesco Physical Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |