Correlation Between PLAYMATES TOYS and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS 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 PLAYMATES TOYS and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and NAKED WINES PLC, you can compare the effects of market volatilities on PLAYMATES TOYS 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 PLAYMATES TOYS with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and NAKED WINES.
Diversification Opportunities for PLAYMATES TOYS and NAKED WINES
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PLAYMATES and NAKED is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS i.e., PLAYMATES TOYS and NAKED WINES go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and NAKED WINES
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the NAKED WINES. But the stock apears to be less risky and, when comparing its historical volatility, PLAYMATES TOYS is 1.24 times less risky than NAKED WINES. The stock trades about -0.21 of its potential returns per unit of risk. The NAKED WINES PLC is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 64.00 in NAKED WINES PLC on September 5, 2024 and sell it today you would lose (5.00) from holding NAKED WINES PLC or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. NAKED WINES PLC
Performance |
| Timeline |
| PLAYMATES TOYS |
| NAKED WINES PLC |
PLAYMATES TOYS and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and NAKED WINES
The main advantage of trading using opposite PLAYMATES TOYS and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS 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's long position.| PLAYMATES TOYS vs. TOTAL GABON | PLAYMATES TOYS vs. Walgreens Boots Alliance | PLAYMATES TOYS vs. Peak Resources Limited |
| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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