Correlation Between Iconic Brands and Naked Wines

Can any of the company-specific risk be diversified away by investing in both Iconic Brands and Naked Wines 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 Iconic Brands and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iconic Brands and Naked Wines plc, you can compare the effects of market volatilities on Iconic Brands and Naked Wines 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 Iconic Brands with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iconic Brands and Naked Wines.

Diversification Opportunities for Iconic Brands and Naked Wines

0.0

Correlation Coefficient

Iconic Brands  Naked Wines

Pay attention - limited upside

The 3 months correlation between Iconic and Naked is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iconic Brands and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc and Iconic Brands 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 Iconic Brands are associated (or correlated) with Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Iconic Brands i.e., Iconic Brands and Naked Wines go up and down completely randomly.

Pair Corralation between Iconic Brands and Naked Wines

Given the investment horizon of 90 days Iconic Brands is expected to generate 11.03 times more return on investment than Naked Wines. However, Iconic Brands is 11.03 times more volatile than Naked Wines plc. It trades about 0.13 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.03 per unit of risk. If you would invest  0.01  in Iconic Brands on May 7, 2025 and sell it today you would earn a total of  0.04  from holding Iconic Brands or generate 400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Iconic Brands  vs.  Naked Wines plc

Iconic Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iconic Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Iconic Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Naked Wines plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Naked Wines may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Iconic Brands and Naked Wines

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

The idea behind Iconic Brands and Naked Wines plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.