Correlation Between Presidio Property and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Presidio Property 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 Presidio Property and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Presidio Property Trust and Naked Wines plc, you can compare the effects of market volatilities on Presidio Property 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 Presidio Property with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Presidio Property and Naked Wines.
Diversification Opportunities for Presidio Property and Naked Wines
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Presidio and Naked is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust 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 Presidio Property 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 Presidio Property Trust 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 Presidio Property i.e., Presidio Property and Naked Wines go up and down completely randomly.
Pair Corralation between Presidio Property and Naked Wines
Given the investment horizon of 90 days Presidio Property is expected to generate 1.67 times less return on investment than Naked Wines. But when comparing it to its historical volatility, Presidio Property Trust is 1.41 times less risky than Naked Wines. It trades about 0.01 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Naked Wines plc on August 29, 2024 and sell it today you would lose (249.00) from holding Naked Wines plc or give up 47.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Presidio Property Trust vs. Naked Wines plc
Performance |
| Timeline |
| Presidio Property Trust |
| Naked Wines plc |
Presidio Property and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Presidio Property and Naked Wines
The main advantage of trading using opposite Presidio Property and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Presidio Property 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.| Presidio Property vs. Investcorp Credit Management | Presidio Property vs. Medalist Diversified Reit | Presidio Property vs. Mingzhu Logistics Holdings |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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