Correlation Between Zedge and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Zedge 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 Zedge and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zedge Inc and Naked Wines plc, you can compare the effects of market volatilities on Zedge 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 Zedge with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and Naked Wines.
Diversification Opportunities for Zedge and Naked Wines
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zedge and Naked is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc 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 Zedge 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 Zedge Inc 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 Zedge i.e., Zedge and Naked Wines go up and down completely randomly.
Pair Corralation between Zedge and Naked Wines
Given the investment horizon of 90 days Zedge Inc is expected to generate 0.67 times more return on investment than Naked Wines. However, Zedge Inc is 1.48 times less risky than Naked Wines. It trades about 0.04 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 191.00 in Zedge Inc on August 29, 2024 and sell it today you would earn a total of 74.00 from holding Zedge Inc or generate 38.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zedge Inc vs. Naked Wines plc
Performance |
| Timeline |
| Zedge Inc |
| Naked Wines plc |
Zedge and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zedge and Naked Wines
The main advantage of trading using opposite Zedge and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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' long position.The idea behind Zedge Inc and Naked Wines plc 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.| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |