Correlation Between NAKED WINES and CVS Health
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on NAKED WINES and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and CVS Health.
Diversification Opportunities for NAKED WINES and CVS Health
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NAKED and CVS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of NAKED WINES i.e., NAKED WINES and CVS Health go up and down completely randomly.
Pair Corralation between NAKED WINES and CVS Health
Assuming the 90 days horizon NAKED WINES PLC is expected to generate 1.39 times more return on investment than CVS Health. However, NAKED WINES is 1.39 times more volatile than CVS Health. It trades about -0.03 of its potential returns per unit of risk. CVS Health is currently generating about -0.07 per unit of risk. If you would invest 71.00 in NAKED WINES PLC on September 19, 2024 and sell it today you would lose (14.00) from holding NAKED WINES PLC or give up 19.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. CVS Health
Performance |
| Timeline |
| NAKED WINES PLC |
| CVS Health |
NAKED WINES and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and CVS Health
The main advantage of trading using opposite NAKED WINES and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| NAKED WINES vs. Richardson Electronics | NAKED WINES vs. QINGCI GAMES INC | NAKED WINES vs. GAMESTOP | NAKED WINES vs. Hochschild Mining plc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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