Correlation Between Axfood AB and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and NAKED WINES PLC, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and NAKED WINES.
Diversification Opportunities for Axfood AB and NAKED WINES
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Axfood and NAKED is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB 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 Axfood AB 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 Axfood AB 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 Axfood AB i.e., Axfood AB and NAKED WINES go up and down completely randomly.
Pair Corralation between Axfood AB and NAKED WINES
Assuming the 90 days trading horizon Axfood AB is expected to generate 5.02 times less return on investment than NAKED WINES. But when comparing it to its historical volatility, Axfood AB is 2.73 times less risky than NAKED WINES. It trades about 0.07 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 56.00 in NAKED WINES PLC on November 7, 2024 and sell it today you would earn a total of 7.00 from holding NAKED WINES PLC or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. NAKED WINES PLC
Performance |
| Timeline |
| Axfood AB |
| NAKED WINES PLC |
Axfood AB and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and NAKED WINES
The main advantage of trading using opposite Axfood AB and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.| Axfood AB vs. Perdoceo Education | Axfood AB vs. MAGNUM MINING EXP | Axfood AB vs. Grand Canyon Education | Axfood AB vs. Zijin Mining Group |
| NAKED WINES vs. Take Two Interactive Software | NAKED WINES vs. DXC Technology Co | NAKED WINES vs. East Africa Metals | NAKED WINES vs. SIERRA METALS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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