Correlation Between Naked Wines and Vintage Wine

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

Diversification Opportunities for Naked Wines and Vintage Wine

0.0

Correlation Coefficient

Naked Wines  Vintage Wine

Pay attention - limited upside

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

Pair Corralation between Naked Wines and Vintage Wine

If you would invest  92.00  in Naked Wines plc on May 7, 2025 and sell it today you would earn a total of  8.00  from holding Naked Wines plc or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Naked Wines plc  vs.  Vintage Wine Estates

Naked Wines plc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Naked Wines reported solid returns over the last few months and may actually be approaching a breakup point.

Vintage Wine Estates

Risk-Adjusted Performance

Weakest

Over the last 90 days Vintage Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vintage Wine is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Naked Wines and Vintage Wine

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

The idea behind Naked Wines plc and Vintage Wine Estates 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.