Correlation Between Treasury Wine and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE, you can compare the effects of market volatilities on Treasury Wine and SBM OFFSHORE 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 SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and SBM OFFSHORE.
Diversification Opportunities for Treasury Wine and SBM OFFSHORE
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and SBM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of Treasury Wine i.e., Treasury Wine and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Treasury Wine and SBM OFFSHORE
Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the SBM OFFSHORE. In addition to that, Treasury Wine is 1.04 times more volatile than SBM OFFSHORE. It trades about -0.3 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.02 per unit of volatility. If you would invest 1,703 in SBM OFFSHORE on October 12, 2024 and sell it today you would earn a total of 6.00 from holding SBM OFFSHORE or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. SBM OFFSHORE
Performance |
| Timeline |
| Treasury Wine Estates |
| SBM OFFSHORE |
Treasury Wine and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and SBM OFFSHORE
The main advantage of trading using opposite Treasury Wine and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE'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 |
| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE vs. CARDINAL HEALTH |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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