Correlation Between Naked Wines and Q2 Holdings
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Q2 Holdings 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 Q2 Holdings 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 Q2 Holdings, you can compare the effects of market volatilities on Naked Wines and Q2 Holdings 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 Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Q2 Holdings.
Diversification Opportunities for Naked Wines and Q2 Holdings
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Naked and QTWO is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings 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 Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Naked Wines i.e., Naked Wines and Q2 Holdings go up and down completely randomly.
Pair Corralation between Naked Wines and Q2 Holdings
Assuming the 90 days horizon Naked Wines is expected to generate 3.13 times less return on investment than Q2 Holdings. But when comparing it to its historical volatility, Naked Wines plc is 2.16 times less risky than Q2 Holdings. It trades about 0.21 of its potential returns per unit of risk. Q2 Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 8,466 in Q2 Holdings on September 1, 2024 and sell it today you would earn a total of 2,008 from holding Q2 Holdings or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Naked Wines plc vs. Q2 Holdings
Performance |
| Timeline |
| Naked Wines plc |
| Q2 Holdings |
Naked Wines and Q2 Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Q2 Holdings
The main advantage of trading using opposite Naked Wines and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Q2 Holdings vs. Ke Holdings | Q2 Holdings vs. nCino Inc | Q2 Holdings vs. Kingsoft Cloud Holdings | Q2 Holdings vs. Jfrog |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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