Correlation Between Naked Wines and 264399DK9

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Can any of the company-specific risk be diversified away by investing in both Naked Wines and 264399DK9 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 264399DK9 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 DUKE PWR LLC, you can compare the effects of market volatilities on Naked Wines and 264399DK9 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 264399DK9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and 264399DK9.

Diversification Opportunities for Naked Wines and 264399DK9

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Naked and 264399DK9 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and DUKE PWR LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE PWR LLC 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 264399DK9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE PWR LLC has no effect on the direction of Naked Wines i.e., Naked Wines and 264399DK9 go up and down completely randomly.

Pair Corralation between Naked Wines and 264399DK9

Assuming the 90 days horizon Naked Wines plc is expected to generate 10.83 times more return on investment than 264399DK9. However, Naked Wines is 10.83 times more volatile than DUKE PWR LLC. It trades about 0.02 of its potential returns per unit of risk. DUKE PWR LLC is currently generating about 0.01 per unit of risk. If you would invest  354.00  in Naked Wines plc on September 12, 2024 and sell it today you would lose (84.00) from holding Naked Wines plc or give up 23.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy92.75%
ValuesDaily Returns

Naked Wines plc  vs.  DUKE PWR LLC

 Performance 
       Timeline  
Naked Wines plc 

Risk-Adjusted Performance

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Over the last 90 days Naked Wines plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Naked Wines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
DUKE PWR LLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DUKE PWR LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 264399DK9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Naked Wines and 264399DK9 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Naked Wines and 264399DK9

The main advantage of trading using opposite Naked Wines and 264399DK9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, 264399DK9 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 264399DK9 will offset losses from the drop in 264399DK9's long position.
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The idea behind Naked Wines plc and DUKE PWR LLC 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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