Correlation Between NAKED WINES and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Commonwealth Bank 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 Commonwealth Bank 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 Commonwealth Bank of, you can compare the effects of market volatilities on NAKED WINES and Commonwealth Bank 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 Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Commonwealth Bank.
Diversification Opportunities for NAKED WINES and Commonwealth Bank
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NAKED and Commonwealth is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank 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 Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of NAKED WINES i.e., NAKED WINES and Commonwealth Bank go up and down completely randomly.
Pair Corralation between NAKED WINES and Commonwealth Bank
Assuming the 90 days horizon NAKED WINES PLC is expected to generate 4.42 times more return on investment than Commonwealth Bank. However, NAKED WINES is 4.42 times more volatile than Commonwealth Bank of. It trades about 0.14 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.1 per unit of risk. If you would invest 56.00 in NAKED WINES PLC on November 5, 2024 and sell it today you would earn a total of 7.00 from holding NAKED WINES PLC or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. Commonwealth Bank of
Performance |
| Timeline |
| NAKED WINES PLC |
| Commonwealth Bank |
NAKED WINES and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Commonwealth Bank
The main advantage of trading using opposite NAKED WINES and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| NAKED WINES vs. BANK OF CHINA | NAKED WINES vs. BANKINTER ADR 2007 | NAKED WINES vs. Commonwealth Bank of | NAKED WINES vs. WILLIS LEASE FIN |
| Commonwealth Bank vs. Perseus Mining Limited | Commonwealth Bank vs. GALENA MINING LTD | Commonwealth Bank vs. Monument Mining Limited | Commonwealth Bank vs. PLAYMATES TOYS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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