Correlation Between Naked Wines and Hasbro
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Hasbro 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 Hasbro 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 Hasbro Inc, you can compare the effects of market volatilities on Naked Wines and Hasbro 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 Hasbro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Hasbro.
Diversification Opportunities for Naked Wines and Hasbro
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naked and Hasbro is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Naked Wines i.e., Naked Wines and Hasbro go up and down completely randomly.
Pair Corralation between Naked Wines and Hasbro
Assuming the 90 days horizon Naked Wines plc is expected to generate 0.87 times more return on investment than Hasbro. However, Naked Wines plc is 1.15 times less risky than Hasbro. It trades about 0.01 of its potential returns per unit of risk. Hasbro Inc is currently generating about -0.03 per unit of risk. If you would invest 270.00 in Naked Wines plc on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Naked Wines plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. Hasbro Inc
Performance |
| Timeline |
| Naked Wines plc |
| Hasbro Inc |
Naked Wines and Hasbro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Hasbro
The main advantage of trading using opposite Naked Wines and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro's long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Hasbro vs. Clarus Corp | Hasbro vs. Escalade Incorporated | Hasbro vs. Johnson Outdoors | Hasbro vs. JAKKS Pacific |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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