Correlation Between Naked Wines and Andrew Peller

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

Diversification Opportunities for Naked Wines and Andrew Peller

0.38

Correlation Coefficient

Naked Wines  Andrew Peller

Weak diversification

The 3 months correlation between Naked and Andrew is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Andrew Peller Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andrew Peller Limited 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 Andrew Peller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andrew Peller Limited has no effect on the direction of Naked Wines i.e., Naked Wines and Andrew Peller go up and down completely randomly.

Pair Corralation between Naked Wines and Andrew Peller

Assuming the 90 days horizon Naked Wines plc is expected to generate 6.24 times more return on investment than Andrew Peller. However, Naked Wines is 6.24 times more volatile than Andrew Peller Limited. It trades about 0.11 of its potential returns per unit of risk. Andrew Peller Limited is currently generating about 0.15 per unit of risk. If you would invest  255.00  in Naked Wines plc on December 29, 2024 and sell it today you would earn a total of  154.00  from holding Naked Wines plc or generate 60.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Naked Wines plc  vs.  Andrew Peller Limited

Naked Wines plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Naked Wines showed solid returns over the last few months and may actually be approaching a breakup point.

Andrew Peller Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andrew Peller Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Andrew Peller reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Naked Wines and Andrew Peller

The main advantage of trading using opposite Naked Wines and Andrew Peller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Andrew Peller 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 Andrew Peller will offset losses from the drop in Andrew Peller's long position.

The idea behind Naked Wines plc and Andrew Peller Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.