Correlation Between Treasury Wine and Indutrade
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on Treasury Wine and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Indutrade.
Diversification Opportunities for Treasury Wine and Indutrade
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Treasury and Indutrade is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Treasury Wine i.e., Treasury Wine and Indutrade go up and down completely randomly.
Pair Corralation between Treasury Wine and Indutrade
Assuming the 90 days horizon Treasury Wine Estates is expected to generate 1.09 times more return on investment than Indutrade. However, Treasury Wine is 1.09 times more volatile than Indutrade AB. It trades about 0.18 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.02 per unit of risk. If you would invest 668.00 in Treasury Wine Estates on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Treasury Wine Estates or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Treasury Wine Estates vs. Indutrade AB
Performance |
| Timeline |
| Treasury Wine Estates |
| Indutrade AB |
Treasury Wine and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Indutrade
The main advantage of trading using opposite Treasury Wine and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| Treasury Wine vs. Diageo plc | Treasury Wine vs. Thai Beverage Public | Treasury Wine vs. Rmy Cointreau SA |
| Indutrade vs. WATSCO INC B | Indutrade vs. Superior Plus Corp | Indutrade vs. SIVERS SEMICONDUCTORS AB | Indutrade vs. NorAm Drilling AS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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