Correlation Between Sealed Air and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Naked Wines 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 Sealed Air and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Naked Wines plc, you can compare the effects of market volatilities on Sealed Air and Naked Wines 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 Sealed Air with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Naked Wines.
Diversification Opportunities for Sealed Air and Naked Wines
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sealed and Naked is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc and Sealed Air 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 Sealed Air are associated (or correlated) with Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Sealed Air i.e., Sealed Air and Naked Wines go up and down completely randomly.
Pair Corralation between Sealed Air and Naked Wines
Considering the 90-day investment horizon Sealed Air is expected to generate 8.17 times less return on investment than Naked Wines. But when comparing it to its historical volatility, Sealed Air is 4.51 times less risky than Naked Wines. It trades about 0.03 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Naked Wines plc on September 4, 2024 and sell it today you would earn a total of 126.00 from holding Naked Wines plc or generate 86.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sealed Air vs. Naked Wines plc
Performance |
| Timeline |
| Sealed Air |
| Naked Wines plc |
Sealed Air and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Naked Wines
The main advantage of trading using opposite Sealed Air and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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