Correlation Between Naked Wines and North American
Can any of the company-specific risk be diversified away by investing in both Naked Wines and North American 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 North American 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 The North American, you can compare the effects of market volatilities on Naked Wines and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and North American.
Diversification Opportunities for Naked Wines and North American
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Naked and North is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and The North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American has no effect on the direction of Naked Wines i.e., Naked Wines and North American go up and down completely randomly.
Pair Corralation between Naked Wines and North American
Assuming the 90 days trading horizon Naked Wines plc is expected to generate 3.54 times more return on investment than North American. However, Naked Wines is 3.54 times more volatile than The North American. It trades about 0.19 of its potential returns per unit of risk. The North American is currently generating about -0.33 per unit of risk. If you would invest 5,090 in Naked Wines plc on December 8, 2024 and sell it today you would earn a total of 630.00 from holding Naked Wines plc or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. The North American
Performance |
| Timeline |
| Naked Wines plc |
| North American |
Naked Wines and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and North American
The main advantage of trading using opposite Naked Wines and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| Naked Wines vs. Scandinavian Tobacco Group | ||
| Naked Wines vs. Liberty Media Corp | ||
| Naked Wines vs. Travel Leisure Co | ||
| Naked Wines vs. Grieg Seafood |
| North American vs. Zegona Communications Plc | ||
| North American vs. Scottish American Investment | ||
| North American vs. Smithson Investment Trust | ||
| North American vs. BlackRock Frontiers Investment |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |