Correlation Between Naked Wines and SOCGEN

Can any of the company-specific risk be diversified away by investing in both Naked Wines and SOCGEN 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 SOCGEN 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 SOCGEN 7367 10 JAN 53, you can compare the effects of market volatilities on Naked Wines and SOCGEN 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 SOCGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and SOCGEN.

Diversification Opportunities for Naked Wines and SOCGEN

-0.68

Correlation Coefficient

Naked Wines  SOCGEN

Excellent diversification

The 3 months correlation between Naked and SOCGEN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and SOCGEN 7367 10 JAN 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCGEN 7367 10 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 SOCGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCGEN 7367 10 has no effect on the direction of Naked Wines i.e., Naked Wines and SOCGEN go up and down completely randomly.

Pair Corralation between Naked Wines and SOCGEN

Assuming the 90 days horizon Naked Wines plc is expected to generate 1.04 times more return on investment than SOCGEN. However, Naked Wines is 1.04 times more volatile than SOCGEN 7367 10 JAN 53. It trades about -0.05 of its potential returns per unit of risk. SOCGEN 7367 10 JAN 53 is currently generating about -0.1 per unit of risk. If you would invest  270.00  in Naked Wines plc on September 18, 2024 and sell it today you would lose (15.00) from holding Naked Wines plc or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.75%
Values	Daily Returns

Naked Wines plc  vs.  SOCGEN 7367 10 JAN 53

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.

SOCGEN 7367 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOCGEN 7367 10 JAN 53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SOCGEN 7367 10 JAN 53 investors.

Pair Trading with Naked Wines and SOCGEN

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

The idea behind Naked Wines plc and SOCGEN 7367 10 JAN 53 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.