Correlation Between Naked Wines and Catheter Precision
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Catheter Precision 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 Catheter Precision 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 Catheter Precision, you can compare the effects of market volatilities on Naked Wines and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Catheter Precision.
Diversification Opportunities for Naked Wines and Catheter Precision
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naked and Catheter is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Naked Wines i.e., Naked Wines and Catheter Precision go up and down completely randomly.
Pair Corralation between Naked Wines and Catheter Precision
Assuming the 90 days horizon Naked Wines plc is expected to generate 0.29 times more return on investment than Catheter Precision. However, Naked Wines plc is 3.5 times less risky than Catheter Precision. It trades about -0.23 of its potential returns per unit of risk. Catheter Precision is currently generating about -0.28 per unit of risk. If you would invest 271.00 in Naked Wines plc on September 20, 2024 and sell it today you would lose (16.00) from holding Naked Wines plc or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Naked Wines plc vs. Catheter Precision
Performance |
| Timeline |
| Naked Wines plc |
| Catheter Precision |
Naked Wines and Catheter Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Catheter Precision
The main advantage of trading using opposite Naked Wines and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Catheter Precision 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 Catheter Precision will offset losses from the drop in Catheter Precision's long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Catheter Precision vs. Ark Restaurants Corp | Catheter Precision vs. Vodka Brands Corp | Catheter Precision vs. Naked Wines plc | Catheter Precision vs. Cannae Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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