Correlation Between NAKED WINES and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on NAKED WINES and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and InPlay Oil.
Diversification Opportunities for NAKED WINES and InPlay Oil
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NAKED and InPlay is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of NAKED WINES i.e., NAKED WINES and InPlay Oil go up and down completely randomly.
Pair Corralation between NAKED WINES and InPlay Oil
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the InPlay Oil. In addition to that, NAKED WINES is 1.34 times more volatile than InPlay Oil Corp. It trades about -0.11 of its total potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.04 per unit of volatility. If you would invest 122.00 in InPlay Oil Corp on September 5, 2024 and sell it today you would lose (3.00) from holding InPlay Oil Corp or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NAKED WINES PLC vs. InPlay Oil Corp
Performance |
| Timeline |
| NAKED WINES PLC |
| InPlay Oil Corp |
NAKED WINES and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and InPlay Oil
The main advantage of trading using opposite NAKED WINES and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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