Correlation Between Australian Dollar and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Australian Dollar 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 Dollar 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 Dollar Currency and Treasury Wine Estates, you can compare the effects of market volatilities on Australian Dollar 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 Dollar with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dollar and Treasury Wine.
Diversification Opportunities for Australian Dollar and Treasury Wine
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Treasury is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dollar Currency 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 Dollar 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 Dollar Currency 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 Dollar i.e., Australian Dollar and Treasury Wine go up and down completely randomly.
Pair Corralation between Australian Dollar and Treasury Wine
Assuming the 90 days trading horizon Australian Dollar is expected to generate 9.48 times less return on investment than Treasury Wine. But when comparing it to its historical volatility, Australian Dollar Currency is 3.64 times less risky than Treasury Wine. It trades about 0.01 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,098 in Treasury Wine Estates on September 12, 2024 and sell it today you would earn a total of 97.00 from holding Treasury Wine Estates or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Australian Dollar Currency vs. Treasury Wine Estates
Performance |
| Timeline |
Australian Dollar and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Australian Dollar Currency
Pair trading matchups for Australian Dollar
Treasury Wine Estates
Pair trading matchups for Treasury Wine
Pair Trading with Australian Dollar and Treasury Wine
The main advantage of trading using opposite Australian Dollar and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dollar 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 Dollar vs. Queste Communications | Australian Dollar vs. Retail Food Group | Australian Dollar vs. Lendlease Group | Australian Dollar vs. K2 Asset Management |
| Treasury Wine vs. Tlou Energy | Treasury Wine vs. Southern Cross Gold | Treasury Wine vs. Minbos Resources | Treasury Wine vs. Elevate Uranium |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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