Correlation Between Century Aluminum and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Century Aluminum 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 Century Aluminum and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Naked Wines plc, you can compare the effects of market volatilities on Century Aluminum 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 Century Aluminum with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Naked Wines.
Diversification Opportunities for Century Aluminum and Naked Wines
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Century and Naked is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum 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 Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and Naked Wines go up and down completely randomly.
Pair Corralation between Century Aluminum and Naked Wines
Given the investment horizon of 90 days Century Aluminum is expected to generate 3.04 times more return on investment than Naked Wines. However, Century Aluminum is 3.04 times more volatile than Naked Wines plc. It trades about 0.29 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.21 per unit of risk. If you would invest 1,682 in Century Aluminum on August 24, 2024 and sell it today you would earn a total of 580.00 from holding Century Aluminum or generate 34.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Century Aluminum vs. Naked Wines plc
Performance |
| Timeline |
| Century Aluminum |
| Naked Wines plc |
Century Aluminum and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Naked Wines
The main advantage of trading using opposite Century Aluminum and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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.| Century Aluminum vs. Eshallgo Class A | Century Aluminum vs. Amtech Systems | Century Aluminum vs. Gold Fields Ltd | Century Aluminum vs. Aegean Airlines SA |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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