Correlation Between Treasury Wine and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure, you can compare the effects of market volatilities on Treasury Wine and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Aristocrat Leisure.
Diversification Opportunities for Treasury Wine and Aristocrat Leisure
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and Aristocrat is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Treasury Wine i.e., Treasury Wine and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Treasury Wine and Aristocrat Leisure
Assuming the 90 days trading horizon Treasury Wine Estates is expected to under-perform the Aristocrat Leisure. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.01 times less risky than Aristocrat Leisure. The stock trades about -0.01 of its potential returns per unit of risk. The Aristocrat Leisure is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,510 in Aristocrat Leisure on August 25, 2024 and sell it today you would earn a total of 2,139 from holding Aristocrat Leisure or generate 47.43% 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. Aristocrat Leisure
Performance |
| Timeline |
| Treasury Wine Estates |
| Aristocrat Leisure |
Treasury Wine and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Aristocrat Leisure
The main advantage of trading using opposite Treasury Wine and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Treasury Wine vs. Zoom2u Technologies | Treasury Wine vs. Retail Food Group | Treasury Wine vs. Ainsworth Game Technology | Treasury Wine vs. Australian Unity Office |
| Aristocrat Leisure vs. Summit Resources Limited | Aristocrat Leisure vs. Ecofibre | Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Adriatic Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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