Correlation Between ITALIAN WINE and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Treasury Wine Estates, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Treasury Wine.
Diversification Opportunities for ITALIAN WINE and Treasury Wine
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ITALIAN and Treasury is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS 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 ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Treasury Wine go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Treasury Wine
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 1.02 times more return on investment than Treasury Wine. However, ITALIAN WINE is 1.02 times more volatile than Treasury Wine Estates. It trades about -0.05 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.12 per unit of risk. If you would invest 2,250 in ITALIAN WINE BRANDS on August 25, 2024 and sell it today you would lose (50.00) from holding ITALIAN WINE BRANDS or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Treasury Wine Estates
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Treasury Wine Estates |
ITALIAN WINE and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Treasury Wine
The main advantage of trading using opposite ITALIAN WINE and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Diageo plc | ITALIAN WINE vs. Superior Plus Corp | ITALIAN WINE vs. NMI Holdings | ITALIAN WINE vs. Origin Agritech |
| Treasury Wine vs. Scientific Games | Treasury Wine vs. Rogers Communications | Treasury Wine vs. China Communications Services | Treasury Wine vs. QIIWI GAMES AB |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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