Correlation Between Naked Wines and Spyre Therapeutics

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

Diversification Opportunities for Naked Wines and Spyre Therapeutics

-0.07

Correlation Coefficient

Naked Wines  Spyre Therapeutics

Good diversification

The 3 months correlation between Naked and Spyre is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics 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 Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Naked Wines i.e., Naked Wines and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Naked Wines and Spyre Therapeutics

Assuming the 90 days horizon Naked Wines plc is expected to generate 0.29 times more return on investment than Spyre Therapeutics. However, Naked Wines plc is 3.45 times less risky than Spyre Therapeutics. It trades about -0.23 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about -0.11 per unit of risk. If you would invest  271.00  in Naked Wines plc on September 21, 2024 and sell it today you would lose (16.00) from holding Naked Wines plc or give up 5.9% of portfolio value over 90 days.

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

Naked Wines plc  vs.  Spyre Therapeutics

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 fairly strong basic indicators, Naked Wines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Naked Wines and Spyre Therapeutics

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

The idea behind Naked Wines plc and Spyre Therapeutics 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.