Correlation Between Treasury Wine and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on Treasury Wine and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and FLOW TRADERS.
Diversification Opportunities for Treasury Wine and FLOW TRADERS
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Treasury and FLOW is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Treasury Wine i.e., Treasury Wine and FLOW TRADERS go up and down completely randomly.
Pair Corralation between Treasury Wine and FLOW TRADERS
Assuming the 90 days horizon Treasury Wine is expected to generate 2.75 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, Treasury Wine Estates is 1.03 times less risky than FLOW TRADERS. It trades about 0.08 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,132 in FLOW TRADERS LTD on September 20, 2024 and sell it today you would earn a total of 120.00 from holding FLOW TRADERS LTD or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. FLOW TRADERS LTD
Performance |
| Timeline |
| Treasury Wine Estates |
| FLOW TRADERS LTD |
Treasury Wine and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and FLOW TRADERS
The main advantage of trading using opposite Treasury Wine and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.The idea behind Treasury Wine Estates and FLOW TRADERS LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FLOW TRADERS vs. JLT MOBILE PUTER | FLOW TRADERS vs. Treasury Wine Estates | FLOW TRADERS vs. Sabra Health Care | FLOW TRADERS vs. Cogent Communications Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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