Correlation Between Naked Wines and XL Fleet

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

Diversification Opportunities for Naked Wines and XL Fleet

-0.42

Correlation Coefficient

Naked Wines  XL Fleet

Very good diversification

The 3 months correlation between Naked and XL Fleet is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and XL Fleet Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Fleet Corp 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 XL Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Fleet Corp has no effect on the direction of Naked Wines i.e., Naked Wines and XL Fleet go up and down completely randomly.

Pair Corralation between Naked Wines and XL Fleet

If you would invest  252.00  in Naked Wines plc on September 27, 2024 and sell it today you would earn a total of  3.00  from holding Naked Wines plc or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Naked Wines plc  vs.  XL Fleet Corp

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.

XL Fleet Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XL Fleet Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, XL Fleet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Naked Wines and XL Fleet

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

The idea behind Naked Wines plc and XL Fleet Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.