Correlation Between Naked Wines and Universal Health
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Universal Health 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 Universal Health 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 Universal Health Services, you can compare the effects of market volatilities on Naked Wines and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Universal Health.
Diversification Opportunities for Naked Wines and Universal Health
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Naked and Universal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Naked Wines i.e., Naked Wines and Universal Health go up and down completely randomly.
Pair Corralation between Naked Wines and Universal Health
Assuming the 90 days trading horizon Naked Wines is expected to generate 2.85 times less return on investment than Universal Health. In addition to that, Naked Wines is 2.21 times more volatile than Universal Health Services. It trades about 0.01 of its total potential returns per unit of risk. Universal Health Services is currently generating about 0.03 per unit of volatility. If you would invest 14,445 in Universal Health Services on January 20, 2025 and sell it today you would earn a total of 3,058 from holding Universal Health Services or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.8% |
| Values | Daily Returns |
Naked Wines plc vs. Universal Health Services
Performance |
| Timeline |
| Naked Wines plc |
| Universal Health Services |
Naked Wines and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Universal Health
The main advantage of trading using opposite Naked Wines and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Naked Wines vs. Jacquet Metal Service | Naked Wines vs. Coeur Mining | Naked Wines vs. Atalaya Mining | Naked Wines vs. Resolute Mining Limited |
| Universal Health vs. Rockfire Resources plc | Universal Health vs. Ikigai Ventures | Universal Health vs. Falcon Oil Gas | Universal Health vs. Pantheon Resources |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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