Correlation Between AVITA Medical and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both AVITA Medical 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 AVITA Medical and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and NAKED WINES PLC, you can compare the effects of market volatilities on AVITA Medical 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 AVITA Medical with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and NAKED WINES.
Diversification Opportunities for AVITA Medical and NAKED WINES
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between AVITA and NAKED is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical 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 AVITA Medical 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 AVITA Medical 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 AVITA Medical i.e., AVITA Medical and NAKED WINES go up and down completely randomly.
Pair Corralation between AVITA Medical and NAKED WINES
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.54 times more return on investment than NAKED WINES. However, AVITA Medical is 1.54 times more volatile than NAKED WINES PLC. It trades about 0.3 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.15 per unit of risk. If you would invest 185.00 in AVITA Medical on September 3, 2024 and sell it today you would earn a total of 55.00 from holding AVITA Medical or generate 29.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. NAKED WINES PLC
Performance |
| Timeline |
| AVITA Medical |
| NAKED WINES PLC |
AVITA Medical and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and NAKED WINES
The main advantage of trading using opposite AVITA Medical and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical 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.| AVITA Medical vs. Tradeweb Markets | AVITA Medical vs. Mitsui Chemicals | AVITA Medical vs. The Trade Desk | AVITA Medical vs. USWE SPORTS AB |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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