Correlation Between Treasury Wine and Lion One
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Treasury Wine and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Lion One.
Diversification Opportunities for Treasury Wine and Lion One
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Treasury and Lion is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Treasury Wine i.e., Treasury Wine and Lion One go up and down completely randomly.
Pair Corralation between Treasury Wine and Lion One
Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.24 times more return on investment than Lion One. However, Treasury Wine Estates is 4.12 times less risky than Lion One. It trades about 0.08 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.14 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. Lion One Metals
Performance |
| Timeline |
| Treasury Wine Estates |
| Lion One Metals |
Treasury Wine and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Lion One
The main advantage of trading using opposite Treasury Wine and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One'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 |
| Lion One vs. Playa Hotels Resorts | Lion One vs. USWE SPORTS AB | Lion One vs. PLAYMATES HLDGS NEW | Lion One vs. Playtech plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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