Correlation Between Naked Wines and NEWMONT

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

Diversification Opportunities for Naked Wines and NEWMONT

0.66

Correlation Coefficient

Naked Wines  NEWMONT

Poor diversification

The 3 months correlation between Naked and NEWMONT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and NEWMONT MNG P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT MNG P 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 NEWMONT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT MNG P has no effect on the direction of Naked Wines i.e., Naked Wines and NEWMONT go up and down completely randomly.

Pair Corralation between Naked Wines and NEWMONT

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the NEWMONT. In addition to that, Naked Wines is 4.65 times more volatile than NEWMONT MNG P. It trades about 0.0 of its total potential returns per unit of risk. NEWMONT MNG P is currently generating about 0.03 per unit of volatility. If you would invest  9,165  in NEWMONT MNG P on December 25, 2024 and sell it today you would earn a total of  149.00  from holding NEWMONT MNG P or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.26%
Values	Daily Returns

Naked Wines plc  vs.  NEWMONT MNG P

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.

NEWMONT MNG P

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEWMONT MNG P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NEWMONT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Naked Wines and NEWMONT

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

The idea behind Naked Wines plc and NEWMONT MNG P 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.