Correlation Between Village Super and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Village Super 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 Village Super and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Super Market and Naked Wines plc, you can compare the effects of market volatilities on Village Super 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 Village Super with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Super and Naked Wines.
Diversification Opportunities for Village Super and Naked Wines
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Village and Naked is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market 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 Village Super 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 Village Super Market 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 Village Super i.e., Village Super and Naked Wines go up and down completely randomly.
Pair Corralation between Village Super and Naked Wines
Assuming the 90 days horizon Village Super Market is expected to generate 2.08 times more return on investment than Naked Wines. However, Village Super is 2.08 times more volatile than Naked Wines plc. It trades about 0.19 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.21 per unit of risk. If you would invest 2,871 in Village Super Market on September 2, 2024 and sell it today you would earn a total of 366.00 from holding Village Super Market or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Village Super Market vs. Naked Wines plc
Performance |
| Timeline |
| Village Super Market |
| Naked Wines plc |
Village Super and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Village Super and Naked Wines
The main advantage of trading using opposite Village Super and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super 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.| Village Super vs. Ingles Markets Incorporated | Village Super vs. Natural Grocers by | Village Super vs. Grocery Outlet Holding | Village Super vs. Weis Markets |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Constellation Brands Class | 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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