Correlation Between Naked Wines and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Whitbread Plc 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 Whitbread Plc 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 Whitbread plc, you can compare the effects of market volatilities on Naked Wines and Whitbread Plc 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 Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Whitbread Plc.
Diversification Opportunities for Naked Wines and Whitbread Plc
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Naked and Whitbread is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc 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 Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Naked Wines i.e., Naked Wines and Whitbread Plc go up and down completely randomly.
Pair Corralation between Naked Wines and Whitbread Plc
Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Whitbread Plc. In addition to that, Naked Wines is 1.58 times more volatile than Whitbread plc. It trades about -0.22 of its total potential returns per unit of risk. Whitbread plc is currently generating about -0.22 per unit of volatility. If you would invest 3,724 in Whitbread plc on October 11, 2024 and sell it today you would lose (128.00) from holding Whitbread plc or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Naked Wines plc vs. Whitbread plc
Performance |
| Timeline |
| Naked Wines plc |
| Whitbread plc |
Naked Wines and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Whitbread Plc
The main advantage of trading using opposite Naked Wines and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Whitbread Plc 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 Whitbread Plc will offset losses from the drop in Whitbread Plc'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 |
| Whitbread Plc vs. Keurig Dr Pepper | Whitbread Plc vs. China Tontine Wines | Whitbread Plc vs. Naked Wines plc | Whitbread Plc vs. Galaxy Gaming |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |