Correlation Between NAKED WINES and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on NAKED WINES and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Electronic Arts.
Diversification Opportunities for NAKED WINES and Electronic Arts
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between NAKED and Electronic is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of NAKED WINES i.e., NAKED WINES and Electronic Arts go up and down completely randomly.
Pair Corralation between NAKED WINES and Electronic Arts
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the Electronic Arts. In addition to that, NAKED WINES is 2.42 times more volatile than Electronic Arts. It trades about -0.18 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.44 per unit of volatility. If you would invest 13,909 in Electronic Arts on September 1, 2024 and sell it today you would earn a total of 1,605 from holding Electronic Arts or generate 11.54% 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. Electronic Arts
Performance |
| Timeline |
| NAKED WINES PLC |
| Electronic Arts |
NAKED WINES and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Electronic Arts
The main advantage of trading using opposite NAKED WINES and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| NAKED WINES vs. ANDREW PELLER LTD | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
| Electronic Arts vs. PREMIER FOODS | Electronic Arts vs. MOLSON RS BEVERAGE | Electronic Arts vs. TYSON FOODS A | Electronic Arts vs. JJ SNACK FOODS |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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