Correlation Between Integral and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Integral 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 Integral and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integral Ad Science and Naked Wines plc, you can compare the effects of market volatilities on Integral 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 Integral with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Naked Wines.
Diversification Opportunities for Integral and Naked Wines
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Integral and Naked is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science 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 Integral 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 Integral Ad Science 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 Integral i.e., Integral and Naked Wines go up and down completely randomly.
Pair Corralation between Integral and Naked Wines
Considering the 90-day investment horizon Integral Ad Science is expected to generate 1.91 times more return on investment than Naked Wines. However, Integral is 1.91 times more volatile than Naked Wines plc. It trades about 0.0 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.05 per unit of risk. If you would invest 1,150 in Integral Ad Science on September 2, 2024 and sell it today you would lose (32.00) from holding Integral Ad Science or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Integral Ad Science vs. Naked Wines plc
Performance |
| Timeline |
| Integral Ad Science |
| Naked Wines plc |
Integral and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integral and Naked Wines
The main advantage of trading using opposite Integral and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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.The idea behind Integral Ad Science and Naked Wines plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Constellation Brands Class | 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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