Correlation Between Naked Wines and Tatton Asset

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

Diversification Opportunities for Naked Wines and Tatton Asset

-0.29

Correlation Coefficient

Naked Wines  Tatton Asset

Very good diversification

The 3 months correlation between Naked and Tatton is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Naked Wines i.e., Naked Wines and Tatton Asset go up and down completely randomly.

Pair Corralation between Naked Wines and Tatton Asset

Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Tatton Asset. In addition to that, Naked Wines is 1.62 times more volatile than Tatton Asset Management. It trades about -0.07 of its total potential returns per unit of risk. Tatton Asset Management is currently generating about 0.03 per unit of volatility. If you would invest  65,699  in Tatton Asset Management on September 30, 2024 and sell it today you would earn a total of  3,301  from holding Tatton Asset Management or generate 5.02% 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.  Tatton Asset Management

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tatton Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Naked Wines and Tatton Asset

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

The idea behind Naked Wines plc and Tatton Asset Management 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.