Correlation Between Naked Wines and Liechtensteinische
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Liechtensteinische 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 Liechtensteinische 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 Liechtensteinische Landesbank AG, you can compare the effects of market volatilities on Naked Wines and Liechtensteinische 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 Liechtensteinische. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Liechtensteinische.
Diversification Opportunities for Naked Wines and Liechtensteinische
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Naked and Liechtensteinische is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Liechtensteinische Landesbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liechtensteinische 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 Liechtensteinische. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liechtensteinische has no effect on the direction of Naked Wines i.e., Naked Wines and Liechtensteinische go up and down completely randomly.
Pair Corralation between Naked Wines and Liechtensteinische
Assuming the 90 days trading horizon Naked Wines plc is expected to generate 3.69 times more return on investment than Liechtensteinische. However, Naked Wines is 3.69 times more volatile than Liechtensteinische Landesbank AG. It trades about 0.05 of its potential returns per unit of risk. Liechtensteinische Landesbank AG is currently generating about 0.03 per unit of risk. If you would invest 3,900 in Naked Wines plc on September 14, 2024 and sell it today you would earn a total of 1,200 from holding Naked Wines plc or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.52% |
| Values | Daily Returns |
Naked Wines plc vs. Liechtensteinische Landesbank
Performance |
| Timeline |
| Naked Wines plc |
| Liechtensteinische |
Naked Wines and Liechtensteinische Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Liechtensteinische
The main advantage of trading using opposite Naked Wines and Liechtensteinische positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Liechtensteinische 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 Liechtensteinische will offset losses from the drop in Liechtensteinische's long position.| Naked Wines vs. Ondine Biomedical | Naked Wines vs. Europa Metals | Naked Wines vs. Revolution Beauty Group | Naked Wines vs. Moonpig Group PLC |
| Liechtensteinische vs. Naked Wines plc | Liechtensteinische vs. Summit Materials Cl | Liechtensteinische vs. Young Cos Brewery | Liechtensteinische vs. Virgin Wines UK |
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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