Correlation Between Naked Wines and Silver Bullet

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Can any of the company-specific risk be diversified away by investing in both Naked Wines and Silver Bullet 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 Silver Bullet 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 Silver Bullet Data, you can compare the effects of market volatilities on Naked Wines and Silver Bullet 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 Silver Bullet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Silver Bullet.

Diversification Opportunities for Naked Wines and Silver Bullet

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Naked and Silver is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Silver Bullet Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bullet Data 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 Silver Bullet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bullet Data has no effect on the direction of Naked Wines i.e., Naked Wines and Silver Bullet go up and down completely randomly.

Pair Corralation between Naked Wines and Silver Bullet

Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Silver Bullet. But the stock apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.03 times less risky than Silver Bullet. The stock trades about -0.11 of its potential returns per unit of risk. The Silver Bullet Data is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,250  in Silver Bullet Data on October 24, 2024 and sell it today you would earn a total of  650.00  from holding Silver Bullet Data or generate 12.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Naked Wines plc  vs.  Silver Bullet Data

 Performance 
       Timeline  
Naked Wines plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Naked Wines plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Silver Bullet Data 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Silver Bullet Data are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Silver Bullet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Naked Wines and Silver Bullet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Naked Wines and Silver Bullet

The main advantage of trading using opposite Naked Wines and Silver Bullet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Silver Bullet 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 Silver Bullet will offset losses from the drop in Silver Bullet's long position.
The idea behind Naked Wines plc and Silver Bullet Data pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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