Correlation Between Naked Wines and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Naked Wines and JLEN Environmental 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 JLEN Environmental 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 JLEN Environmental Assets, you can compare the effects of market volatilities on Naked Wines and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and JLEN Environmental.
Diversification Opportunities for Naked Wines and JLEN Environmental
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Naked and JLEN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Naked Wines i.e., Naked Wines and JLEN Environmental go up and down completely randomly.
Pair Corralation between Naked Wines and JLEN Environmental
Assuming the 90 days trading horizon Naked Wines plc is expected to generate 2.46 times more return on investment than JLEN Environmental. However, Naked Wines is 2.46 times more volatile than JLEN Environmental Assets. It trades about -0.01 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.1 per unit of risk. If you would invest 6,580 in Naked Wines plc on November 3, 2024 and sell it today you would lose (1,080) from holding Naked Wines plc or give up 16.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Naked Wines plc vs. JLEN Environmental Assets
Performance |
| Timeline |
| Naked Wines plc |
| JLEN Environmental Assets |
Naked Wines and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and JLEN Environmental
The main advantage of trading using opposite Naked Wines and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Naked Wines vs. Flow Traders NV | Naked Wines vs. Sunny Optical Technology | Naked Wines vs. Pfeiffer Vacuum Technology | Naked Wines vs. Qurate Retail Series |
| JLEN Environmental vs. Universal Health Services | JLEN Environmental vs. Scandic Hotels Group | JLEN Environmental vs. Primary Health Properties | JLEN Environmental vs. MyHealthChecked 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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