Correlation Between Gfinity PLC and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Gfinity PLC 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 Gfinity PLC and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gfinity PLC and Naked Wines plc, you can compare the effects of market volatilities on Gfinity PLC 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 Gfinity PLC with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfinity PLC and Naked Wines.
Diversification Opportunities for Gfinity PLC and Naked Wines
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gfinity and Naked is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC i.e., Gfinity PLC and Naked Wines go up and down completely randomly.
Pair Corralation between Gfinity PLC and Naked Wines
Assuming the 90 days trading horizon Gfinity PLC is expected to generate 4.57 times more return on investment than Naked Wines. However, Gfinity PLC is 4.57 times more volatile than Naked Wines plc. It trades about 0.12 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.07 per unit of risk. If you would invest 2.30 in Gfinity PLC on October 25, 2024 and sell it today you would earn a total of 4.45 from holding Gfinity PLC or generate 193.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.16% |
| Values | Daily Returns |
Gfinity PLC vs. Naked Wines plc
Performance |
| Timeline |
| Gfinity PLC |
| Naked Wines plc |
Gfinity PLC and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfinity PLC and Naked Wines
The main advantage of trading using opposite Gfinity PLC and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfinity PLC 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.| Gfinity PLC vs. Allianz Technology Trust | Gfinity PLC vs. Sealed Air Corp | Gfinity PLC vs. Ryanair Holdings plc | Gfinity PLC vs. SMA Solar Technology |
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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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