Correlation Between Connecticut Light and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Connecticut Light 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 Connecticut Light and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and Treasury Wine Estates, you can compare the effects of market volatilities on Connecticut Light 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 Connecticut Light with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Treasury Wine.
Diversification Opportunities for Connecticut Light and Treasury Wine
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Connecticut and Treasury is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light 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 Connecticut Light 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 The Connecticut Light 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 Connecticut Light i.e., Connecticut Light and Treasury Wine go up and down completely randomly.
Pair Corralation between Connecticut Light and Treasury Wine
Assuming the 90 days horizon The Connecticut Light is expected to generate 0.82 times more return on investment than Treasury Wine. However, The Connecticut Light is 1.22 times less risky than Treasury Wine. It trades about 0.03 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.02 per unit of risk. If you would invest 3,107 in The Connecticut Light on September 1, 2024 and sell it today you would earn a total of 224.00 from holding The Connecticut Light or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.58% |
| Values | Daily Returns |
The Connecticut Light vs. Treasury Wine Estates
Performance |
| Timeline |
| Connecticut Light |
| Treasury Wine Estates |
Connecticut Light and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and Treasury Wine
The main advantage of trading using opposite Connecticut Light and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light 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.| Connecticut Light vs. Live Ventures | Connecticut Light vs. Alvotech | Connecticut Light vs. Lipocine | Connecticut Light vs. RadNet Inc |
| Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Willamette Valley Vineyards | Treasury Wine vs. MGP Ingredients | Treasury Wine vs. Duckhorn Portfolio |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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