Correlation Between Retail Food and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Retail Food 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 Retail Food and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Treasury Wine Estates, you can compare the effects of market volatilities on Retail Food 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 Retail Food with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Treasury Wine.
Diversification Opportunities for Retail Food and Treasury Wine
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and Treasury is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group 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 Retail Food 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 Retail Food Group 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 Retail Food i.e., Retail Food and Treasury Wine go up and down completely randomly.
Pair Corralation between Retail Food and Treasury Wine
Assuming the 90 days trading horizon Retail Food Group is expected to generate 1.87 times more return on investment than Treasury Wine. However, Retail Food is 1.87 times more volatile than Treasury Wine Estates. It trades about 0.18 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.06 per unit of risk. If you would invest 6.60 in Retail Food Group on August 29, 2024 and sell it today you would earn a total of 0.70 from holding Retail Food Group or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Retail Food Group vs. Treasury Wine Estates
Performance |
| Timeline |
| Retail Food Group |
| Treasury Wine Estates |
Retail Food and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Treasury Wine
The main advantage of trading using opposite Retail Food and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food 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.| Retail Food vs. Autosports Group | Retail Food vs. AiMedia Technologies | Retail Food vs. BKI Investment | Retail Food vs. ARN Media Limited |
| Treasury Wine vs. PVW Resources | Treasury Wine vs. Woolworths | Treasury Wine vs. Wesfarmers | Treasury Wine vs. Coles Group |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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