Correlation Between NAKED WINES and BEAZER HOMES

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

Diversification Opportunities for NAKED WINES and BEAZER HOMES

-0.23

Correlation Coefficient

NAKED WINES  BEAZER HOMES

Very good diversification

The 3 months correlation between NAKED and BEAZER is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and BEAZER HOMES USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEAZER HOMES USA 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 BEAZER HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEAZER HOMES USA has no effect on the direction of NAKED WINES i.e., NAKED WINES and BEAZER HOMES go up and down completely randomly.

Pair Corralation between NAKED WINES and BEAZER HOMES

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the BEAZER HOMES. In addition to that, NAKED WINES is 1.07 times more volatile than BEAZER HOMES USA. It trades about -0.03 of its total potential returns per unit of risk. BEAZER HOMES USA is currently generating about 0.17 per unit of volatility. If you would invest  1,650  in BEAZER HOMES USA on April 25, 2025 and sell it today you would earn a total of  510.00  from holding BEAZER HOMES USA or generate 30.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NAKED WINES PLC  vs.  BEAZER HOMES USA

NAKED WINES PLC

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

BEAZER HOMES USA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BEAZER HOMES USA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BEAZER HOMES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NAKED WINES and BEAZER HOMES

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

The idea behind NAKED WINES PLC and BEAZER HOMES USA 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.