Correlation Between NAKED WINES and International Business
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on NAKED WINES and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and International Business.
Diversification Opportunities for NAKED WINES and International Business
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NAKED and International is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of NAKED WINES i.e., NAKED WINES and International Business go up and down completely randomly.
Pair Corralation between NAKED WINES and International Business
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the International Business. In addition to that, NAKED WINES is 3.2 times more volatile than International Business Machines. It trades about -0.02 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.1 per unit of volatility. If you would invest 12,054 in International Business Machines on September 20, 2024 and sell it today you would earn a total of 9,731 from holding International Business Machines or generate 80.73% 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. International Business Machine
Performance |
| Timeline |
| NAKED WINES PLC |
| International Business |
NAKED WINES and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and International Business
The main advantage of trading using opposite NAKED WINES and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| NAKED WINES vs. Ross Stores | NAKED WINES vs. SPARTAN STORES | NAKED WINES vs. COSTCO WHOLESALE CDR | NAKED WINES vs. LEGACY IRON ORE |
| International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Microsoft |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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