Correlation Between Treasury Wine and Arcadium Lithium
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Arcadium Lithium 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 Arcadium Lithium 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 Arcadium Lithium plc, you can compare the effects of market volatilities on Treasury Wine and Arcadium Lithium 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 Arcadium Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Arcadium Lithium.
Diversification Opportunities for Treasury Wine and Arcadium Lithium
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and Arcadium is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Arcadium Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadium Lithium plc 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 Arcadium Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadium Lithium plc has no effect on the direction of Treasury Wine i.e., Treasury Wine and Arcadium Lithium go up and down completely randomly.
Pair Corralation between Treasury Wine and Arcadium Lithium
Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.5 times more return on investment than Arcadium Lithium. However, Treasury Wine Estates is 2.02 times less risky than Arcadium Lithium. It trades about 0.03 of its potential returns per unit of risk. Arcadium Lithium plc is currently generating about 0.01 per unit of risk. If you would invest 626.00 in Treasury Wine Estates on September 2, 2024 and sell it today you would earn a total of 59.00 from holding Treasury Wine Estates or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.27% |
| Values | Daily Returns |
Treasury Wine Estates vs. Arcadium Lithium plc
Performance |
| Timeline |
| Treasury Wine Estates |
| Arcadium Lithium plc |
Treasury Wine and Arcadium Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Arcadium Lithium
The main advantage of trading using opposite Treasury Wine and Arcadium Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Arcadium Lithium 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 Arcadium Lithium will offset losses from the drop in Arcadium Lithium's long position.| Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Constellation Brands Class | Treasury Wine vs. Brown Forman |
| Arcadium Lithium vs. Japan Tobacco ADR | Arcadium Lithium vs. Compania Cervecerias Unidas | Arcadium Lithium vs. GoHealth | Arcadium Lithium vs. Palomar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |