Correlation Between Naked Wines and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Naked Wines and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Ross Stores.
Diversification Opportunities for Naked Wines and Ross Stores
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naked and Ross is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Naked Wines i.e., Naked Wines and Ross Stores go up and down completely randomly.
Pair Corralation between Naked Wines and Ross Stores
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Ross Stores. In addition to that, Naked Wines is 1.01 times more volatile than Ross Stores. It trades about -0.22 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.17 per unit of volatility. If you would invest 14,397 in Ross Stores on August 28, 2024 and sell it today you would earn a total of 973.00 from holding Ross Stores or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. Ross Stores
Performance |
| Timeline |
| Naked Wines plc |
| Ross Stores |
Naked Wines and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Ross Stores
The main advantage of trading using opposite Naked Wines and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' 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 |
| Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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