Correlation Between NAKED WINES and FIREWEED METALS
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and FIREWEED METALS 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 FIREWEED METALS 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 FIREWEED METALS P, you can compare the effects of market volatilities on NAKED WINES and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and FIREWEED METALS.
Diversification Opportunities for NAKED WINES and FIREWEED METALS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NAKED and FIREWEED is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of NAKED WINES i.e., NAKED WINES and FIREWEED METALS go up and down completely randomly.
Pair Corralation between NAKED WINES and FIREWEED METALS
Assuming the 90 days horizon NAKED WINES is expected to generate 1.15 times less return on investment than FIREWEED METALS. In addition to that, NAKED WINES is 1.05 times more volatile than FIREWEED METALS P. It trades about 0.03 of its total potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.04 per unit of volatility. If you would invest 77.00 in FIREWEED METALS P on September 13, 2024 and sell it today you would earn a total of 17.00 from holding FIREWEED METALS P or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. FIREWEED METALS P
Performance |
| Timeline |
| NAKED WINES PLC |
| FIREWEED METALS P |
NAKED WINES and FIREWEED METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and FIREWEED METALS
The main advantage of trading using opposite NAKED WINES and FIREWEED METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, FIREWEED METALS 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 FIREWEED METALS will offset losses from the drop in FIREWEED METALS'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 |
| FIREWEED METALS vs. American Lithium Corp | FIREWEED METALS vs. ADRIATIC METALS LS 013355 | FIREWEED METALS vs. Superior Plus Corp | FIREWEED METALS vs. SIVERS SEMICONDUCTORS AB |
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 Stocks Directory module to find actively traded stocks across global markets.
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