Correlation Between Naked Wines and Fresh Grapes
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Fresh Grapes 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 Fresh Grapes 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 Fresh Grapes LLC, you can compare the effects of market volatilities on Naked Wines and Fresh Grapes 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 Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Fresh Grapes.
Diversification Opportunities for Naked Wines and Fresh Grapes
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Naked and Fresh is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes 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 Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Naked Wines i.e., Naked Wines and Fresh Grapes go up and down completely randomly.
Pair Corralation between Naked Wines and Fresh Grapes
Assuming the 90 days horizon Naked Wines plc is expected to generate 0.18 times more return on investment than Fresh Grapes. However, Naked Wines plc is 5.63 times less risky than Fresh Grapes. It trades about 0.21 of its potential returns per unit of risk. Fresh Grapes LLC is currently generating about -0.16 per unit of risk. If you would invest 252.00 in Naked Wines plc on August 24, 2024 and sell it today you would earn a total of 19.00 from holding Naked Wines plc or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Naked Wines plc vs. Fresh Grapes LLC
Performance |
| Timeline |
| Naked Wines plc |
| Fresh Grapes LLC |
Naked Wines and Fresh Grapes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Fresh Grapes
The main advantage of trading using opposite Naked Wines and Fresh Grapes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Fresh Grapes 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 Fresh Grapes will offset losses from the drop in Fresh Grapes' long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Fresh Grapes vs. Andrew Peller Limited | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. The Tinley Beverage |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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