Correlation Between Treasury Wine and Kalgoorlie Gold
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Kalgoorlie Gold 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 Kalgoorlie Gold 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 Kalgoorlie Gold Mining, you can compare the effects of market volatilities on Treasury Wine and Kalgoorlie Gold 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 Kalgoorlie Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Kalgoorlie Gold.
Diversification Opportunities for Treasury Wine and Kalgoorlie Gold
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treasury and Kalgoorlie is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Kalgoorlie Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalgoorlie Gold Mining 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 Kalgoorlie Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalgoorlie Gold Mining has no effect on the direction of Treasury Wine i.e., Treasury Wine and Kalgoorlie Gold go up and down completely randomly.
Pair Corralation between Treasury Wine and Kalgoorlie Gold
Assuming the 90 days trading horizon Treasury Wine Estates is expected to generate 0.21 times more return on investment than Kalgoorlie Gold. However, Treasury Wine Estates is 4.84 times less risky than Kalgoorlie Gold. It trades about -0.11 of its potential returns per unit of risk. Kalgoorlie Gold Mining is currently generating about -0.11 per unit of risk. If you would invest 1,100 in Treasury Wine Estates on November 7, 2024 and sell it today you would lose (35.00) from holding Treasury Wine Estates or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Treasury Wine Estates vs. Kalgoorlie Gold Mining
Performance |
| Timeline |
| Treasury Wine Estates |
| Kalgoorlie Gold Mining |
Treasury Wine and Kalgoorlie Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Kalgoorlie Gold
The main advantage of trading using opposite Treasury Wine and Kalgoorlie Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Kalgoorlie Gold 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 Kalgoorlie Gold will offset losses from the drop in Kalgoorlie Gold's long position.| Treasury Wine vs. Dexus Convenience Retail | Treasury Wine vs. IDP Education | Treasury Wine vs. Kip McGrath Education | Treasury Wine vs. Clime Investment Management |
| Kalgoorlie Gold vs. Northern Star Resources | Kalgoorlie Gold vs. Evolution Mining | Kalgoorlie Gold vs. Bluescope Steel | Kalgoorlie Gold vs. De Grey 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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