Correlation Between NAKED WINES and WT OFFSHORE

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

Diversification Opportunities for NAKED WINES and WT OFFSHORE

0.66

Correlation Coefficient

NAKED WINES  WT OFFSHORE

Poor diversification

The 3 months correlation between NAKED and UWV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of NAKED WINES i.e., NAKED WINES and WT OFFSHORE go up and down completely randomly.

Pair Corralation between NAKED WINES and WT OFFSHORE

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 1.26 times more return on investment than WT OFFSHORE. However, NAKED WINES is 1.26 times more volatile than WT OFFSHORE. It trades about -0.03 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.05 per unit of risk. If you would invest  144.00  in NAKED WINES PLC on October 22, 2024 and sell it today you would lose (92.00) from holding NAKED WINES PLC or give up 63.89% of portfolio value over 90 days.

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

NAKED WINES PLC  vs.  WT OFFSHORE

NAKED WINES PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAKED WINES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WT OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT OFFSHORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WT OFFSHORE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NAKED WINES and WT OFFSHORE

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

The idea behind NAKED WINES PLC and WT OFFSHORE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.