Correlation Between NAKED WINES and Constellation Software
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Constellation Software 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 Constellation Software 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 Constellation Software, you can compare the effects of market volatilities on NAKED WINES and Constellation Software 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 Constellation Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Constellation Software.
Diversification Opportunities for NAKED WINES and Constellation Software
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NAKED and Constellation is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of NAKED WINES i.e., NAKED WINES and Constellation Software go up and down completely randomly.
Pair Corralation between NAKED WINES and Constellation Software
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the Constellation Software. In addition to that, NAKED WINES is 2.22 times more volatile than Constellation Software. It trades about -0.15 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.45 per unit of volatility. If you would invest 283,000 in Constellation Software on September 3, 2024 and sell it today you would earn a total of 36,000 from holding Constellation Software or generate 12.72% 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. Constellation Software
Performance |
| Timeline |
| NAKED WINES PLC |
| Constellation Software |
NAKED WINES and Constellation Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Constellation Software
The main advantage of trading using opposite NAKED WINES and Constellation Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Constellation Software 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 Constellation Software will offset losses from the drop in Constellation Software's long position.| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
| Constellation Software vs. Performance Food Group | Constellation Software vs. GRIFFIN MINING LTD | Constellation Software vs. PT Indofood Sukses | Constellation Software vs. Tyson Foods |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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