Correlation Between Naked Wines and Markel Corp
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Markel Corp 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 Markel Corp 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 Markel Corp, you can compare the effects of market volatilities on Naked Wines and Markel Corp 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 Markel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Markel Corp.
Diversification Opportunities for Naked Wines and Markel Corp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naked and Markel is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp 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 Markel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel Corp has no effect on the direction of Naked Wines i.e., Naked Wines and Markel Corp go up and down completely randomly.
Pair Corralation between Naked Wines and Markel Corp
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Markel Corp. In addition to that, Naked Wines is 2.82 times more volatile than Markel Corp. It trades about -0.04 of its total potential returns per unit of risk. Markel Corp is currently generating about 0.06 per unit of volatility. If you would invest 133,618 in Markel Corp on September 2, 2024 and sell it today you would earn a total of 45,028 from holding Markel Corp or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Naked Wines plc vs. Markel Corp
Performance |
| Timeline |
| Naked Wines plc |
| Markel Corp |
Naked Wines and Markel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Markel Corp
The main advantage of trading using opposite Naked Wines and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Markel Corp 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 Markel Corp will offset losses from the drop in Markel Corp's long position.| Naked Wines vs. Microchip Technology | Naked Wines vs. Sabien Technology Group | Naked Wines vs. Auction Technology Group | Naked Wines vs. Sabre Insurance Group |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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