Correlation Between Naked Wines and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Zoom Video 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 Zoom Video 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 Zoom Video Communications, you can compare the effects of market volatilities on Naked Wines and Zoom Video 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 Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Zoom Video.
Diversification Opportunities for Naked Wines and Zoom Video
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Naked and Zoom is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications 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 Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Naked Wines i.e., Naked Wines and Zoom Video go up and down completely randomly.
Pair Corralation between Naked Wines and Zoom Video
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Zoom Video. In addition to that, Naked Wines is 1.69 times more volatile than Zoom Video Communications. It trades about -0.02 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.03 per unit of volatility. If you would invest 7,000 in Zoom Video Communications on August 28, 2024 and sell it today you would earn a total of 1,953 from holding Zoom Video Communications or generate 27.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Naked Wines plc vs. Zoom Video Communications
Performance |
| Timeline |
| Naked Wines plc |
| Zoom Video Communications |
Naked Wines and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Zoom Video
The main advantage of trading using opposite Naked Wines and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Hyundai Motor | Naked Wines vs. Toyota Motor Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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