Correlation Between NAKED WINES and STEEL DYNAMICS

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

Diversification Opportunities for NAKED WINES and STEEL DYNAMICS

0.49

Correlation Coefficient

NAKED WINES  STEEL DYNAMICS

Very weak diversification

The 3 months correlation between NAKED and STEEL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS 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 STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of NAKED WINES i.e., NAKED WINES and STEEL DYNAMICS go up and down completely randomly.

Pair Corralation between NAKED WINES and STEEL DYNAMICS

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 2.3 times more return on investment than STEEL DYNAMICS. However, NAKED WINES is 2.3 times more volatile than STEEL DYNAMICS. It trades about 0.03 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.05 per unit of risk. If you would invest  54.00  in NAKED WINES PLC on December 21, 2024 and sell it today you would earn a total of  1.00  from holding NAKED WINES PLC or generate 1.85% return on investment over 90 days.

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

NAKED WINES PLC  vs.  STEEL DYNAMICS

NAKED WINES PLC

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NAKED WINES PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NAKED WINES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

STEEL DYNAMICS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STEEL DYNAMICS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, STEEL DYNAMICS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NAKED WINES and STEEL DYNAMICS

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

The idea behind NAKED WINES PLC and STEEL DYNAMICS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.