Correlation Between Naked Wines and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials Co, you can compare the effects of market volatilities on Naked Wines and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Vulcan Materials.
Diversification Opportunities for Naked Wines and Vulcan Materials
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Naked and Vulcan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Naked Wines i.e., Naked Wines and Vulcan Materials go up and down completely randomly.
Pair Corralation between Naked Wines and Vulcan Materials
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Vulcan Materials. But the stock apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.35 times less risky than Vulcan Materials. The stock trades about -0.22 of its potential returns per unit of risk. The Vulcan Materials Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 25,976 in Vulcan Materials Co on August 30, 2024 and sell it today you would earn a total of 2,684 from holding Vulcan Materials Co or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Naked Wines plc vs. Vulcan Materials Co
Performance |
| Timeline |
| Naked Wines plc |
| Vulcan Materials |
Naked Wines and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Vulcan Materials
The main advantage of trading using opposite Naked Wines and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Naked Wines vs. Mulberry Group PLC | Naked Wines vs. London Security Plc | Naked Wines vs. Triad Group PLC | Naked Wines vs. World Chess PLC |
| Vulcan Materials vs. Aeorema Communications Plc | Vulcan Materials vs. Fortune Brands Home | Vulcan Materials vs. Telecom Italia SpA | Vulcan Materials vs. Martin Marietta Materials |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |