Correlation Between Beeks Trading and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Beeks Trading 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 Beeks Trading and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beeks Trading and Naked Wines plc, you can compare the effects of market volatilities on Beeks Trading 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 Beeks Trading with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and Naked Wines.
Diversification Opportunities for Beeks Trading and Naked Wines
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beeks and Naked is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading 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 Beeks Trading 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 Beeks Trading 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 Beeks Trading i.e., Beeks Trading and Naked Wines go up and down completely randomly.
Pair Corralation between Beeks Trading and Naked Wines
Assuming the 90 days trading horizon Beeks Trading is expected to generate 1.11 times more return on investment than Naked Wines. However, Beeks Trading is 1.11 times more volatile than Naked Wines plc. It trades about 0.17 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.06 per unit of risk. If you would invest 26,800 in Beeks Trading on September 12, 2024 and sell it today you would earn a total of 2,700 from holding Beeks Trading or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beeks Trading vs. Naked Wines plc
Performance |
| Timeline |
| Beeks Trading |
| Naked Wines plc |
Beeks Trading and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beeks Trading and Naked Wines
The main advantage of trading using opposite Beeks Trading and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beeks Trading 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.| Beeks Trading vs. Home Depot | Beeks Trading vs. Chrysalis Investments | Beeks Trading vs. Neometals | Beeks Trading vs. Coor Service Management |
| Naked Wines vs. Hyundai Motor | Naked Wines vs. Toyota Motor Corp | Naked Wines vs. SoftBank Group Corp | Naked Wines vs. Halyk Bank of |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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