Correlation Between Treasury Wine and Gold Road
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Treasury Wine and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Gold Road.
Diversification Opportunities for Treasury Wine and Gold Road
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and Gold is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Treasury Wine i.e., Treasury Wine and Gold Road go up and down completely randomly.
Pair Corralation between Treasury Wine and Gold Road
Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Gold Road. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.41 times less risky than Gold Road. The stock trades about -0.3 of its potential returns per unit of risk. The Gold Road Resources is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 128.00 in Gold Road Resources on October 12, 2024 and sell it today you would lose (3.00) from holding Gold Road Resources or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. Gold Road Resources
Performance |
| Timeline |
| Treasury Wine Estates |
| Gold Road Resources |
Treasury Wine and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Gold Road
The main advantage of trading using opposite Treasury Wine and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Treasury Wine vs. SAN MIGUEL BREWERY | Treasury Wine vs. Safety Insurance Group | Treasury Wine vs. ANGLO ASIAN MINING | Treasury Wine vs. Monster Beverage Corp |
| Gold Road vs. ELECTRONIC ARTS | Gold Road vs. Waste Management | Gold Road vs. CeoTronics AG | Gold Road vs. AGF Management Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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