Correlation Between Heidelberg Materials and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials 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 Heidelberg Materials and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and NAKED WINES PLC, you can compare the effects of market volatilities on Heidelberg Materials 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 Heidelberg Materials with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and NAKED WINES.
Diversification Opportunities for Heidelberg Materials and NAKED WINES
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heidelberg and NAKED is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG 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 Heidelberg Materials 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 Heidelberg Materials AG 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 Heidelberg Materials i.e., Heidelberg Materials and NAKED WINES go up and down completely randomly.
Pair Corralation between Heidelberg Materials and NAKED WINES
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.37 times more return on investment than NAKED WINES. However, Heidelberg Materials AG is 2.67 times less risky than NAKED WINES. It trades about 0.02 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.12 per unit of risk. If you would invest 11,860 in Heidelberg Materials AG on September 23, 2024 and sell it today you would earn a total of 60.00 from holding Heidelberg Materials AG or generate 0.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Heidelberg Materials AG vs. NAKED WINES PLC
Performance |
Timeline |
Heidelberg Materials |
NAKED WINES PLC |
Heidelberg Materials and NAKED WINES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Heidelberg Materials and NAKED WINES
The main advantage of trading using opposite Heidelberg Materials and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials 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.Heidelberg Materials vs. Daikin IndustriesLtd | Heidelberg Materials vs. Compagnie de Saint Gobain | Heidelberg Materials vs. Vulcan Materials | Heidelberg Materials vs. Anhui Conch Cement |
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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.
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