Correlation Between NAKED WINES and Apple

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

Diversification Opportunities for NAKED WINES and Apple

0.28

Correlation Coefficient

NAKED WINES  Apple

Modest diversification

The 3 months correlation between NAKED and Apple is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of NAKED WINES i.e., NAKED WINES and Apple go up and down completely randomly.

Pair Corralation between NAKED WINES and Apple

Assuming the 90 days horizon NAKED WINES is expected to generate 5.45 times less return on investment than Apple. In addition to that, NAKED WINES is 2.32 times more volatile than Apple Inc. It trades about 0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of volatility. If you would invest  20,605  in Apple Inc on August 30, 2024 and sell it today you would earn a total of  1,590  from holding Apple Inc or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

NAKED WINES PLC  vs.  Apple Inc

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. Despite nearly stable basic indicators, NAKED WINES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with NAKED WINES and Apple

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

The idea behind NAKED WINES PLC and Apple Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.