Correlation Between Treasury Wine and G8 Education
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and G8 Education 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 G8 Education 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 G8 Education, you can compare the effects of market volatilities on Treasury Wine and G8 Education 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 G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and G8 Education.
Diversification Opportunities for Treasury Wine and G8 Education
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Treasury and GEM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education 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 G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Treasury Wine i.e., Treasury Wine and G8 Education go up and down completely randomly.
Pair Corralation between Treasury Wine and G8 Education
Assuming the 90 days trading horizon Treasury Wine is expected to generate 2.74 times less return on investment than G8 Education. But when comparing it to its historical volatility, Treasury Wine Estates is 1.13 times less risky than G8 Education. It trades about 0.03 of its potential returns per unit of risk. G8 Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 101.00 in G8 Education on August 29, 2024 and sell it today you would earn a total of 33.00 from holding G8 Education or generate 32.67% 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. G8 Education
Performance |
| Timeline |
| Treasury Wine Estates |
| G8 Education |
Treasury Wine and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and G8 Education
The main advantage of trading using opposite Treasury Wine and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Treasury Wine vs. PVW Resources | Treasury Wine vs. Woolworths | Treasury Wine vs. Wesfarmers | Treasury Wine vs. Coles Group |
| G8 Education vs. Summit Resources Limited | G8 Education vs. Champion Iron | G8 Education vs. Ridley | G8 Education vs. Peel Mining |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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