Correlation Between NAKED WINES and Pure Storage

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

Diversification Opportunities for NAKED WINES and Pure Storage

-0.33

Correlation Coefficient

NAKED WINES  Pure Storage

Very good diversification

The 3 months correlation between NAKED and Pure is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage 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 Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of NAKED WINES i.e., NAKED WINES and Pure Storage go up and down completely randomly.

Pair Corralation between NAKED WINES and Pure Storage

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 1.43 times more return on investment than Pure Storage. However, NAKED WINES is 1.43 times more volatile than Pure Storage. It trades about 0.11 of its potential returns per unit of risk. Pure Storage is currently generating about -0.09 per unit of risk. If you would invest  56.00  in NAKED WINES PLC on December 28, 2024 and sell it today you would earn a total of  16.00  from holding NAKED WINES PLC or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NAKED WINES PLC  vs.  Pure Storage

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. Despite nearly unsteady basic indicators, NAKED WINES reported solid returns over the last few months and may actually be approaching a breakup point.

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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 Pure Storage

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

The idea behind NAKED WINES PLC and Pure Storage 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.