Correlation Between Naked Wines and Rmy Cointreau
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Rmy Cointreau 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 Rmy Cointreau 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 Rmy Cointreau SA, you can compare the effects of market volatilities on Naked Wines and Rmy Cointreau 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 Rmy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Rmy Cointreau.
Diversification Opportunities for Naked Wines and Rmy Cointreau
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Naked and Rmy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA 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 Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of Naked Wines i.e., Naked Wines and Rmy Cointreau go up and down completely randomly.
Pair Corralation between Naked Wines and Rmy Cointreau
Assuming the 90 days horizon Naked Wines is expected to generate 3.36 times less return on investment than Rmy Cointreau. In addition to that, Naked Wines is 3.72 times more volatile than Rmy Cointreau SA. It trades about 0.02 of its total potential returns per unit of risk. Rmy Cointreau SA is currently generating about 0.29 per unit of volatility. If you would invest 5,793 in Rmy Cointreau SA on September 15, 2024 and sell it today you would earn a total of 869.00 from holding Rmy Cointreau SA or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Naked Wines plc vs. Rmy Cointreau SA
Performance |
| Timeline |
| Naked Wines plc |
| Rmy Cointreau SA |
Naked Wines and Rmy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Rmy Cointreau
The main advantage of trading using opposite Naked Wines and Rmy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Rmy Cointreau 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 Rmy Cointreau will offset losses from the drop in Rmy Cointreau's long position.| Naked Wines vs. Andrew Peller Limited | Naked Wines vs. Aristocrat Group Corp | Naked Wines vs. Willamette Valley Vineyards | Naked Wines vs. Brown Forman |
| Rmy Cointreau vs. Andrew Peller Limited | Rmy Cointreau vs. Aristocrat Group Corp | Rmy Cointreau vs. Naked Wines plc | Rmy Cointreau vs. Willamette Valley Vineyards |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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