Correlation Between Hollywood Bowl and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl 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 Hollywood Bowl and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hollywood Bowl Group and Naked Wines plc, you can compare the effects of market volatilities on Hollywood Bowl 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 Hollywood Bowl with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Naked Wines.
Diversification Opportunities for Hollywood Bowl and Naked Wines
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hollywood and Naked is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group 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 Hollywood Bowl 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 Hollywood Bowl Group 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 Hollywood Bowl i.e., Hollywood Bowl and Naked Wines go up and down completely randomly.
Pair Corralation between Hollywood Bowl and Naked Wines
Assuming the 90 days trading horizon Hollywood Bowl Group is expected to generate 0.64 times more return on investment than Naked Wines. However, Hollywood Bowl Group is 1.57 times less risky than Naked Wines. It trades about 0.05 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.16 per unit of risk. If you would invest 31,700 in Hollywood Bowl Group on September 4, 2024 and sell it today you would earn a total of 350.00 from holding Hollywood Bowl Group or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hollywood Bowl Group vs. Naked Wines plc
Performance |
| Timeline |
| Hollywood Bowl Group |
| Naked Wines plc |
Hollywood Bowl and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hollywood Bowl and Naked Wines
The main advantage of trading using opposite Hollywood Bowl and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl 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.| Hollywood Bowl vs. Samsung Electronics Co | Hollywood Bowl vs. Samsung Electronics Co | Hollywood Bowl vs. Hyundai Motor | Hollywood Bowl vs. Toyota Motor Corp |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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