Correlation Between NAKED WINES and Easy Software
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Easy Software 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 Easy Software 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 Easy Software AG, you can compare the effects of market volatilities on NAKED WINES and Easy Software 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 Easy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Easy Software.
Diversification Opportunities for NAKED WINES and Easy Software
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NAKED and Easy is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of NAKED WINES i.e., NAKED WINES and Easy Software go up and down completely randomly.
Pair Corralation between NAKED WINES and Easy Software
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the Easy Software. In addition to that, NAKED WINES is 1.21 times more volatile than Easy Software AG. It trades about -0.06 of its total potential returns per unit of risk. Easy Software AG is currently generating about 0.12 per unit of volatility. If you would invest 1,500 in Easy Software AG on October 21, 2024 and sell it today you would earn a total of 300.00 from holding Easy Software AG or generate 20.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NAKED WINES PLC vs. Easy Software AG
Performance |
Timeline |
NAKED WINES PLC |
Easy Software AG |
NAKED WINES and Easy Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NAKED WINES and Easy Software
The main advantage of trading using opposite NAKED WINES and Easy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Easy Software 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 Easy Software will offset losses from the drop in Easy Software's long position.NAKED WINES vs. Easy Software AG | ||
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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.
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