Correlation Between Naked Wines and High Performance

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

Diversification Opportunities for Naked Wines and High Performance

0.0

Correlation Coefficient

Naked Wines  High Performance

Pay attention - limited upside

The 3 months correlation between Naked and High is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and High Performance Beverages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Performance Bev 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 High Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Performance Bev has no effect on the direction of Naked Wines i.e., Naked Wines and High Performance go up and down completely randomly.

Pair Corralation between Naked Wines and High Performance

If you would invest  0.00  in High Performance Beverages on September 23, 2024 and sell it today you would earn a total of  0.00  from holding High Performance Beverages or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Naked Wines plc  vs.  High Performance Beverages

Naked Wines plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Naked Wines may actually be approaching a critical reversion point that can send shares even higher in January 2025.

High Performance Bev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Performance Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, High Performance is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Naked Wines and High Performance

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

The idea behind Naked Wines plc and High Performance Beverages 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.