Correlation Between CARSALES and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both CARSALES and NAKED WINES 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 CARSALES and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and NAKED WINES PLC, you can compare the effects of market volatilities on CARSALES and NAKED WINES 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 CARSALES with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and NAKED WINES.
Diversification Opportunities for CARSALES and NAKED WINES
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARSALES and NAKED is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC and CARSALES 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 CARSALESCOM are associated (or correlated) with NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of CARSALES i.e., CARSALES and NAKED WINES go up and down completely randomly.
Pair Corralation between CARSALES and NAKED WINES
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.45 times more return on investment than NAKED WINES. However, CARSALESCOM is 2.2 times less risky than NAKED WINES. It trades about 0.09 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about 0.0 per unit of risk. If you would invest 2,064 in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of 496.00 from holding CARSALESCOM or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. NAKED WINES PLC
Performance |
| Timeline |
| CARSALESCOM |
| NAKED WINES PLC |
CARSALES and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and NAKED WINES
The main advantage of trading using opposite CARSALES and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
| NAKED WINES vs. CHINA TONTINE WINES | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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