Correlation Between NAKED WINES and Synovus Financial

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

Diversification Opportunities for NAKED WINES and Synovus Financial

-0.12

Correlation Coefficient

NAKED WINES  Synovus Financial

Good diversification

The 3 months correlation between NAKED and Synovus is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial 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 Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of NAKED WINES i.e., NAKED WINES and Synovus Financial go up and down completely randomly.

Pair Corralation between NAKED WINES and Synovus Financial

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 2.43 times more return on investment than Synovus Financial. However, NAKED WINES is 2.43 times more volatile than Synovus Financial Corp. It trades about 0.06 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about -0.07 per unit of risk. If you would invest  54.00  in NAKED WINES PLC on December 23, 2024 and sell it today you would earn a total of  6.00  from holding NAKED WINES PLC or generate 11.11% 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.  Synovus Financial Corp

NAKED WINES PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NAKED WINES PLC are ranked lower than 4 (%) 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.

Synovus Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synovus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NAKED WINES and Synovus Financial

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

The idea behind NAKED WINES PLC and Synovus Financial 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.