Correlation Between Treasury Wine and British American
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and British American 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 Treasury Wine and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treasury Wine Estates and British American Tobacco, you can compare the effects of market volatilities on Treasury Wine and British American 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 Treasury Wine with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and British American.
Diversification Opportunities for Treasury Wine and British American
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and British is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Treasury 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 Treasury Wine Estates are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Treasury Wine i.e., Treasury Wine and British American go up and down completely randomly.
Pair Corralation between Treasury Wine and British American
Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.88 times more return on investment than British American. However, Treasury Wine Estates is 1.13 times less risky than British American. It trades about 0.08 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.02 per unit of risk. If you would invest 638.00 in Treasury Wine Estates on December 1, 2024 and sell it today you would earn a total of 19.00 from holding Treasury Wine Estates or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. British American Tobacco
Performance |
| Timeline |
| Treasury Wine Estates |
| British American Tobacco |
Treasury Wine and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and British American
The main advantage of trading using opposite Treasury Wine and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Treasury Wine vs. Guangdong Investment Limited | Treasury Wine vs. JLF INVESTMENT | Treasury Wine vs. Gruppo Mutuionline SpA | Treasury Wine vs. MEDCAW INVESTMENTS LS 01 |
| British American vs. CORNISH METALS INC | British American vs. Jacquet Metal Service | British American vs. AIR PRODCHEMICALS | British American vs. SBM OFFSHORE |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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