Correlation Between Treasury Wine and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Peel Mining 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 Peel Mining 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 Peel Mining, you can compare the effects of market volatilities on Treasury Wine and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Peel Mining.
Diversification Opportunities for Treasury Wine and Peel Mining
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Treasury and Peel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Treasury Wine i.e., Treasury Wine and Peel Mining go up and down completely randomly.
Pair Corralation between Treasury Wine and Peel Mining
Assuming the 90 days trading horizon Treasury Wine Estates is expected to under-perform the Peel Mining. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 2.84 times less risky than Peel Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Peel Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Peel Mining on November 6, 2024 and sell it today you would earn a total of 1.00 from holding Peel Mining or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. Peel Mining
Performance |
| Timeline |
| Treasury Wine Estates |
| Peel Mining |
Treasury Wine and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Peel Mining
The main advantage of trading using opposite Treasury Wine and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Treasury Wine vs. Charter Hall Retail | Treasury Wine vs. Technology One | Treasury Wine vs. Dexus Convenience Retail | Treasury Wine vs. Ainsworth Game Technology |
| Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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