Correlation Between Crimson Wine and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Crimson Wine 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 Crimson Wine and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crimson Wine and Naked Wines plc, you can compare the effects of market volatilities on Crimson Wine 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 Crimson Wine with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Naked Wines.
Diversification Opportunities for Crimson Wine and Naked Wines
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crimson and Naked is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine 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 Crimson Wine 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 Crimson Wine 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 Crimson Wine i.e., Crimson Wine and Naked Wines go up and down completely randomly.
Pair Corralation between Crimson Wine and Naked Wines
Given the investment horizon of 90 days Crimson Wine is expected to under-perform the Naked Wines. But the otc stock apears to be less risky and, when comparing its historical volatility, Crimson Wine is 1.03 times less risky than Naked Wines. The otc stock trades about -0.11 of its potential returns per unit of risk. The Naked Wines plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 252.00 in Naked Wines plc on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Naked Wines plc or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crimson Wine vs. Naked Wines plc
Performance |
| Timeline |
| Crimson Wine |
| Naked Wines plc |
Crimson Wine and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crimson Wine and Naked Wines
The main advantage of trading using opposite Crimson Wine and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine 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.| Crimson Wine vs. Embotelladora Andina SA | Crimson Wine vs. Signet International Holdings | Crimson Wine vs. National Beverage Corp | Crimson Wine vs. PT Astra International |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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