Correlation Between Bankers Investment and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Bankers Investment 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 Bankers Investment and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankers Investment Trust and Naked Wines plc, you can compare the effects of market volatilities on Bankers Investment 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 Bankers Investment with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Naked Wines.
Diversification Opportunities for Bankers Investment and Naked Wines
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bankers and Naked is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust 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 Bankers Investment 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 Bankers Investment Trust 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 Bankers Investment i.e., Bankers Investment and Naked Wines go up and down completely randomly.
Pair Corralation between Bankers Investment and Naked Wines
Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.3 times more return on investment than Naked Wines. However, Bankers Investment Trust is 3.37 times less risky than Naked Wines. It trades about 0.28 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.22 per unit of risk. If you would invest 11,200 in Bankers Investment Trust on August 28, 2024 and sell it today you would earn a total of 380.00 from holding Bankers Investment Trust or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankers Investment Trust vs. Naked Wines plc
Performance |
| Timeline |
| Bankers Investment Trust |
| Naked Wines plc |
Bankers Investment and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankers Investment and Naked Wines
The main advantage of trading using opposite Bankers Investment and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment 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.| Bankers Investment vs. Sunny Optical Technology | Bankers Investment vs. Albion Technology General | Bankers Investment vs. Check Point Software | Bankers Investment vs. Bisichi Mining PLC |
| Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Hyundai Motor | Naked Wines vs. Toyota Motor Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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