Correlation Between ANT and Naked Wines
Can any of the company-specific risk be diversified away by investing in both ANT 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 ANT and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and Naked Wines plc, you can compare the effects of market volatilities on ANT 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 ANT with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Naked Wines.
Diversification Opportunities for ANT and Naked Wines
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ANT and Naked is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ANT 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 ANT 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 ANT 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 ANT i.e., ANT and Naked Wines go up and down completely randomly.
Pair Corralation between ANT and Naked Wines
Assuming the 90 days trading horizon ANT is expected to generate 38.65 times more return on investment than Naked Wines. However, ANT is 38.65 times more volatile than Naked Wines plc. It trades about 0.16 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.12 per unit of risk. If you would invest 610.00 in ANT on November 2, 2024 and sell it today you would lose (463.00) from holding ANT or give up 75.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANT vs. Naked Wines plc
Performance |
| Timeline |
| ANT |
| Naked Wines plc |
ANT and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and Naked Wines
The main advantage of trading using opposite ANT and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT 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.The idea behind ANT and Naked Wines plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |