Correlation Between Naked Wines and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Monks Investment 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 Monks Investment 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 Monks Investment Trust, you can compare the effects of market volatilities on Naked Wines and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Monks Investment.
Diversification Opportunities for Naked Wines and Monks Investment
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naked and Monks is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Naked Wines i.e., Naked Wines and Monks Investment go up and down completely randomly.
Pair Corralation between Naked Wines and Monks Investment
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Monks Investment. In addition to that, Naked Wines is 2.9 times more volatile than Monks Investment Trust. It trades about -0.05 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.16 per unit of volatility. If you would invest 116,000 in Monks Investment Trust on September 25, 2024 and sell it today you would earn a total of 10,400 from holding Monks Investment Trust or generate 8.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Naked Wines plc vs. Monks Investment Trust
Performance |
Timeline |
Naked Wines plc |
Monks Investment Trust |
Naked Wines and Monks Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Naked Wines and Monks Investment
The main advantage of trading using opposite Naked Wines and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's long position.Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Hyundai Motor | Naked Wines vs. Toyota Motor Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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