Correlation Between Naked Wines and Village Super
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Village Super 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 Village Super 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 Village Super Market, you can compare the effects of market volatilities on Naked Wines and Village Super 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 Village Super. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Village Super.
Diversification Opportunities for Naked Wines and Village Super
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Naked and Village is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market 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 Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of Naked Wines i.e., Naked Wines and Village Super go up and down completely randomly.
Pair Corralation between Naked Wines and Village Super
Assuming the 90 days horizon Naked Wines is expected to generate 2.0 times less return on investment than Village Super. In addition to that, Naked Wines is 4.13 times more volatile than Village Super Market. It trades about 0.01 of its total potential returns per unit of risk. Village Super Market is currently generating about 0.05 per unit of volatility. If you would invest 2,207 in Village Super Market on September 2, 2024 and sell it today you would earn a total of 1,030 from holding Village Super Market or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Naked Wines plc vs. Village Super Market
Performance |
| Timeline |
| Naked Wines plc |
| Village Super Market |
Naked Wines and Village Super Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Village Super
The main advantage of trading using opposite Naked Wines and Village Super positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Village Super 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 Village Super will offset losses from the drop in Village Super'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 |
| Village Super vs. Ingles Markets Incorporated | Village Super vs. Natural Grocers by | Village Super vs. Grocery Outlet Holding | Village Super vs. Weis Markets |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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