Correlation Between Naked Wines and Kaufman Et

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

Diversification Opportunities for Naked Wines and Kaufman Et

0.77

Correlation Coefficient

Naked Wines  Kaufman Et

Poor diversification

The 3 months correlation between Naked and Kaufman is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Kaufman Et Broad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Et Broad 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 Kaufman Et. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Et Broad has no effect on the direction of Naked Wines i.e., Naked Wines and Kaufman Et go up and down completely randomly.

Pair Corralation between Naked Wines and Kaufman Et

Assuming the 90 days trading horizon Naked Wines plc is expected to generate 1.52 times more return on investment than Kaufman Et. However, Naked Wines is 1.52 times more volatile than Kaufman Et Broad. It trades about 0.02 of its potential returns per unit of risk. Kaufman Et Broad is currently generating about -0.03 per unit of risk. If you would invest  5,300  in Naked Wines plc on September 13, 2024 and sell it today you would earn a total of  40.00  from holding Naked Wines plc or generate 0.75% return on investment over 90 days.

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

Naked Wines plc  vs.  Kaufman Et Broad

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. In spite of comparatively stable basic indicators, Naked Wines is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kaufman Et Broad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Et Broad has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kaufman Et 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 Kaufman Et

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

The idea behind Naked Wines plc and Kaufman Et Broad 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 Stocks Directory module to find actively traded stocks across global markets.