Correlation Between NAKED WINES and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Qantas Airways 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 Qantas Airways 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 Qantas Airways Limited, you can compare the effects of market volatilities on NAKED WINES and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Qantas Airways.
Diversification Opportunities for NAKED WINES and Qantas Airways
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NAKED and Qantas is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Qantas Airways Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of NAKED WINES i.e., NAKED WINES and Qantas Airways go up and down completely randomly.
Pair Corralation between NAKED WINES and Qantas Airways
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the Qantas Airways. In addition to that, NAKED WINES is 2.33 times more volatile than Qantas Airways Limited. It trades about -0.01 of its total potential returns per unit of risk. Qantas Airways Limited is currently generating about 0.04 per unit of volatility. If you would invest 400.00 in Qantas Airways Limited on September 3, 2024 and sell it today you would earn a total of 139.00 from holding Qantas Airways Limited or generate 34.75% 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. Qantas Airways Limited
Performance |
| Timeline |
| NAKED WINES PLC |
| Qantas Airways |
NAKED WINES and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Qantas Airways
The main advantage of trading using opposite NAKED WINES and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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