Correlation Between Naked Wines and Venu Holding

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

Diversification Opportunities for Naked Wines and Venu Holding

-0.01

Correlation Coefficient

Naked Wines  Venu Holding

Good diversification

The 3 months correlation between Naked and Venu is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Venu Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venu Holding 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 Venu Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venu Holding has no effect on the direction of Naked Wines i.e., Naked Wines and Venu Holding go up and down completely randomly.

Pair Corralation between Naked Wines and Venu Holding

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Venu Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 227.1 times less risky than Venu Holding. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Venu Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Venu Holding on October 7, 2024 and sell it today you would earn a total of  965.00  from holding Venu Holding or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.79%
Values	Daily Returns

Naked Wines plc  vs.  Venu Holding

Naked Wines plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Venu Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Venu Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Venu Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Naked Wines and Venu Holding

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

The idea behind Naked Wines plc and Venu Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.