Correlation Between Australian Unity and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Treasury 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 Australian Unity and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Treasury Wine Estates, you can compare the effects of market volatilities on Australian Unity and Treasury 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 Australian Unity with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Treasury Wine.
Diversification Opportunities for Australian Unity and Treasury Wine
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Treasury is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates and Australian Unity 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 Australian Unity Office are associated (or correlated) with Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Australian Unity i.e., Australian Unity and Treasury Wine go up and down completely randomly.
Pair Corralation between Australian Unity and Treasury Wine
Assuming the 90 days trading horizon Australian Unity Office is expected to generate 1.22 times more return on investment than Treasury Wine. However, Australian Unity is 1.22 times more volatile than Treasury Wine Estates. It trades about 0.07 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.01 per unit of risk. If you would invest 85.00 in Australian Unity Office on August 25, 2024 and sell it today you would earn a total of 21.00 from holding Australian Unity Office or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Treasury Wine Estates
Performance |
| Timeline |
| Australian Unity Office |
| Treasury Wine Estates |
Australian Unity and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Treasury Wine
The main advantage of trading using opposite Australian Unity and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Treasury 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Australian Unity vs. Infomedia | Australian Unity vs. Treasury Wine Estates | Australian Unity vs. Fisher Paykel Healthcare | Australian Unity vs. COAST ENTERTAINMENT HOLDINGS |
| Treasury Wine vs. Zoom2u Technologies | Treasury Wine vs. Retail Food Group | Treasury Wine vs. Ainsworth Game Technology | Treasury Wine vs. Australian Unity Office |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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