Correlation Between Naked Wines and Seaport Entertainment

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

Diversification Opportunities for Naked Wines and Seaport Entertainment

-0.34

Correlation Coefficient

Naked Wines  Seaport Entertainment

Very good diversification

The 3 months correlation between Naked and Seaport is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment 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 Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Naked Wines i.e., Naked Wines and Seaport Entertainment go up and down completely randomly.

Pair Corralation between Naked Wines and Seaport Entertainment

Assuming the 90 days horizon Naked Wines plc is expected to generate 2.17 times more return on investment than Seaport Entertainment. However, Naked Wines is 2.17 times more volatile than Seaport Entertainment Group. It trades about 0.0 of its potential returns per unit of risk. Seaport Entertainment Group is currently generating about -0.14 per unit of risk. If you would invest  255.00  in Naked Wines plc on December 26, 2024 and sell it today you would lose (25.00) from holding Naked Wines plc or give up 9.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Naked Wines plc  vs.  Seaport Entertainment Group

Naked Wines plc

Risk-Adjusted Performance

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 fairly strong basic indicators, Naked Wines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seaport Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seaport Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Naked Wines and Seaport Entertainment

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

The idea behind Naked Wines plc and Seaport Entertainment Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.