Correlation Between Naked Wines and United Internet
Can any of the company-specific risk be diversified away by investing in both Naked Wines and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Naked Wines and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and United Internet.
Diversification Opportunities for Naked Wines and United Internet
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Naked and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Naked Wines i.e., Naked Wines and United Internet go up and down completely randomly.
Pair Corralation between Naked Wines and United Internet
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the United Internet. In addition to that, Naked Wines is 1.65 times more volatile than United Internet AG. It trades about -0.03 of its total potential returns per unit of risk. United Internet AG is currently generating about 0.03 per unit of volatility. If you would invest 1,313 in United Internet AG on August 31, 2024 and sell it today you would earn a total of 252.00 from holding United Internet AG or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. United Internet AG
Performance |
| Timeline |
| Naked Wines plc |
| United Internet AG |
Naked Wines and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and United Internet
The main advantage of trading using opposite Naked Wines and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Naked Wines vs. Jacquet Metal Service | Naked Wines vs. Tyson Foods Cl | Naked Wines vs. Hochschild Mining plc | Naked Wines vs. Metals Exploration Plc |
| United Internet vs. Schroders Investment Trusts | United Internet vs. XLMedia PLC | United Internet vs. Liberty Media Corp | United Internet vs. Scandinavian Tobacco Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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