Correlation Between Ecclesiastical Insurance and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance 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 Ecclesiastical Insurance and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and Naked Wines plc, you can compare the effects of market volatilities on Ecclesiastical Insurance 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 Ecclesiastical Insurance with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and Naked Wines.
Diversification Opportunities for Ecclesiastical Insurance and Naked Wines
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ecclesiastical and Naked is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office 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 Ecclesiastical Insurance i.e., Ecclesiastical Insurance and Naked Wines go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and Naked Wines
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to generate 0.65 times more return on investment than Naked Wines. However, Ecclesiastical Insurance Office is 1.54 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 -0.26 per unit of risk. If you would invest 13,600 in Ecclesiastical Insurance Office on September 1, 2024 and sell it today you would lose (200.00) from holding Ecclesiastical Insurance Office or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. Naked Wines plc
Performance |
| Timeline |
| Ecclesiastical Insurance |
| Naked Wines plc |
Ecclesiastical Insurance and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and Naked Wines
The main advantage of trading using opposite Ecclesiastical Insurance and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance 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.| Ecclesiastical Insurance vs. Toyota Motor Corp | Ecclesiastical Insurance vs. SoftBank Group Corp | Ecclesiastical Insurance vs. Fannie Mae | Ecclesiastical Insurance vs. Apple Inc |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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