Correlation Between Naked Wines and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Analog Devices 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 Naked Wines and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and Analog Devices, you can compare the effects of market volatilities on Naked Wines and Analog Devices 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 Naked Wines with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Analog Devices.
Diversification Opportunities for Naked Wines and Analog Devices
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naked and Analog is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Naked Wines 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 Naked Wines plc are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Naked Wines i.e., Naked Wines and Analog Devices go up and down completely randomly.
Pair Corralation between Naked Wines and Analog Devices
Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Analog Devices. But the pink sheet apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.25 times less risky than Analog Devices. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Analog Devices is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20,877 in Analog Devices on September 19, 2024 and sell it today you would earn a total of 505.00 from holding Analog Devices or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Naked Wines plc vs. Analog Devices
Performance |
| Timeline |
| Naked Wines plc |
| Analog Devices |
Naked Wines and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Analog Devices
The main advantage of trading using opposite Naked Wines and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |