Correlation Between Naked Wines and Associated British
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Naked Wines and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Associated British.
Diversification Opportunities for Naked Wines and Associated British
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Naked and Associated is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Naked Wines i.e., Naked Wines and Associated British go up and down completely randomly.
Pair Corralation between Naked Wines and Associated British
Assuming the 90 days trading horizon Naked Wines plc is expected to generate 1.95 times more return on investment than Associated British. However, Naked Wines is 1.95 times more volatile than Associated British Foods. It trades about -0.04 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.08 per unit of risk. If you would invest 6,000 in Naked Wines plc on August 31, 2024 and sell it today you would lose (930.00) from holding Naked Wines plc or give up 15.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. Associated British Foods
Performance |
| Timeline |
| Naked Wines plc |
| Associated British Foods |
Naked Wines and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Associated British
The main advantage of trading using opposite Naked Wines and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Naked Wines vs. Jacquet Metal Service | Naked Wines vs. Tyson Foods Cl | Naked Wines vs. Hochschild Mining plc | Naked Wines vs. Metals Exploration Plc |
| Associated British vs. Aeorema Communications Plc | Associated British vs. British American Tobacco | Associated British vs. Induction Healthcare Group | Associated British vs. Optima Health plc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |