Correlation Between Naked Wines and Remy Cointreau
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Remy Cointreau 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 Remy Cointreau 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 Remy Cointreau SA, you can compare the effects of market volatilities on Naked Wines and Remy Cointreau 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 Remy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Remy Cointreau.
Diversification Opportunities for Naked Wines and Remy Cointreau
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Naked and Remy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA 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 Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of Naked Wines i.e., Naked Wines and Remy Cointreau go up and down completely randomly.
Pair Corralation between Naked Wines and Remy Cointreau
Assuming the 90 days horizon Naked Wines plc is expected to generate 1.13 times more return on investment than Remy Cointreau. However, Naked Wines is 1.13 times more volatile than Remy Cointreau SA. It trades about -0.04 of its potential returns per unit of risk. Remy Cointreau SA is currently generating about -0.12 per unit of risk. If you would invest 321.00 in Naked Wines plc on August 31, 2024 and sell it today you would lose (50.00) from holding Naked Wines plc or give up 15.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Naked Wines plc vs. Remy Cointreau SA
Performance |
| Timeline |
| Naked Wines plc |
| Remy Cointreau SA |
Naked Wines and Remy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Remy Cointreau
The main advantage of trading using opposite Naked Wines and Remy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Remy Cointreau 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 Remy Cointreau will offset losses from the drop in Remy Cointreau's long position.| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Brown Forman |
| Remy Cointreau vs. Diageo PLC ADR | Remy Cointreau vs. Pernod Ricard SA | Remy Cointreau vs. Treasury Wine Estates | Remy Cointreau vs. MGP Ingredients |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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