Correlation Between NAKED WINES and Indutrade
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on NAKED WINES and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Indutrade.
Diversification Opportunities for NAKED WINES and Indutrade
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NAKED and Indutrade is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of NAKED WINES i.e., NAKED WINES and Indutrade go up and down completely randomly.
Pair Corralation between NAKED WINES and Indutrade
Assuming the 90 days horizon NAKED WINES PLC is expected to generate 2.27 times more return on investment than Indutrade. However, NAKED WINES is 2.27 times more volatile than Indutrade AB. It trades about 0.03 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.09 per unit of risk. If you would invest 63.00 in NAKED WINES PLC on September 12, 2024 and sell it today you would earn a total of 2.00 from holding NAKED WINES PLC or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. Indutrade AB
Performance |
| Timeline |
| NAKED WINES PLC |
| Indutrade AB |
NAKED WINES and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Indutrade
The main advantage of trading using opposite NAKED WINES and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. SIVERS SEMICONDUCTORS AB | NAKED WINES vs. CHINA HUARONG ENERHD 50 |
| Indutrade vs. Marie Brizard Wine | Indutrade vs. Treasury Wine Estates | Indutrade vs. NAKED WINES PLC | Indutrade vs. National Retail Properties |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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