Correlation Between NAKED WINES and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on NAKED WINES and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and STMicroelectronics.
Diversification Opportunities for NAKED WINES and STMicroelectronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between NAKED and STMicroelectronics is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of NAKED WINES i.e., NAKED WINES and STMicroelectronics go up and down completely randomly.
Pair Corralation between NAKED WINES and STMicroelectronics
Assuming the 90 days horizon NAKED WINES PLC is expected to generate 1.35 times more return on investment than STMicroelectronics. However, NAKED WINES is 1.35 times more volatile than STMicroelectronics NV. It trades about 0.0 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 69.00 in NAKED WINES PLC on November 8, 2024 and sell it today you would lose (6.00) from holding NAKED WINES PLC or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. STMicroelectronics NV
Performance |
| Timeline |
| NAKED WINES PLC |
| STMicroelectronics |
NAKED WINES and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and STMicroelectronics
The main advantage of trading using opposite NAKED WINES and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| NAKED WINES vs. Autohome ADR | NAKED WINES vs. Media and Games | NAKED WINES vs. Haverty Furniture Companies | NAKED WINES vs. CITY OFFICE REIT |
| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Texas Instruments Incorporated |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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