Correlation Between Hardide PLC and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Hardide 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 Hardide 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 Hardide PLC and Naked Wines plc, you can compare the effects of market volatilities on Hardide 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 Hardide PLC with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and Naked Wines.
Diversification Opportunities for Hardide PLC and Naked Wines
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hardide and Naked is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hardide 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 Hardide 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 Hardide 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 Hardide PLC i.e., Hardide PLC and Naked Wines go up and down completely randomly.
Pair Corralation between Hardide PLC and Naked Wines
Assuming the 90 days trading horizon Hardide PLC is expected to generate 1.22 times more return on investment than Naked Wines. However, Hardide PLC is 1.22 times more volatile than Naked Wines plc. It trades about -0.05 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 725.00 in Hardide PLC on October 25, 2024 and sell it today you would lose (175.00) from holding Hardide PLC or give up 24.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hardide PLC vs. Naked Wines plc
Performance |
| Timeline |
| Hardide PLC |
| Naked Wines plc |
Hardide PLC and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hardide PLC and Naked Wines
The main advantage of trading using opposite Hardide PLC and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide 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.| Hardide PLC vs. Capital Drilling | Hardide PLC vs. Ross Stores | Hardide PLC vs. Omega Healthcare Investors | Hardide PLC vs. Software Circle plc |
| Naked Wines vs. Tungsten West PLC | Naked Wines vs. Argo Group Limited | Naked Wines vs. Hardide PLC | Naked Wines vs. Gfinity PLC |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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