Correlation Between Naked Wines and 92826CAH5

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Can any of the company-specific risk be diversified away by investing in both Naked Wines and 92826CAH5 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 92826CAH5 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 VISA INC 275, you can compare the effects of market volatilities on Naked Wines and 92826CAH5 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 92826CAH5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and 92826CAH5.

Diversification Opportunities for Naked Wines and 92826CAH5

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Naked and 92826CAH5 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and VISA INC 275 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VISA INC 275 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 92826CAH5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VISA INC 275 has no effect on the direction of Naked Wines i.e., Naked Wines and 92826CAH5 go up and down completely randomly.

Pair Corralation between Naked Wines and 92826CAH5

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the 92826CAH5. In addition to that, Naked Wines is 7.98 times more volatile than VISA INC 275. It trades about -0.22 of its total potential returns per unit of risk. VISA INC 275 is currently generating about -0.05 per unit of volatility. If you would invest  9,553  in VISA INC 275 on October 25, 2024 and sell it today you would lose (67.00) from holding VISA INC 275 or give up 0.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Naked Wines plc  vs.  VISA INC 275

 Performance 
       Timeline  
Naked Wines plc 

Risk-Adjusted Performance

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Weak
 
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Very Weak
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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
VISA INC 275 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VISA INC 275 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 92826CAH5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Naked Wines and 92826CAH5 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Naked Wines and 92826CAH5

The main advantage of trading using opposite Naked Wines and 92826CAH5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, 92826CAH5 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 92826CAH5 will offset losses from the drop in 92826CAH5's long position.
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The idea behind Naked Wines plc and VISA INC 275 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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