Correlation Between WA1 Resources and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both WA1 Resources and Treasury Wine 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 WA1 Resources and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WA1 Resources and Treasury Wine Estates, you can compare the effects of market volatilities on WA1 Resources and Treasury Wine 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 WA1 Resources with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA1 Resources and Treasury Wine.
Diversification Opportunities for WA1 Resources and Treasury Wine
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between WA1 and Treasury is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding WA1 Resources and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates and WA1 Resources 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 WA1 Resources are associated (or correlated) with Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of WA1 Resources i.e., WA1 Resources and Treasury Wine go up and down completely randomly.
Pair Corralation between WA1 Resources and Treasury Wine
Assuming the 90 days trading horizon WA1 Resources is expected to generate 2.74 times more return on investment than Treasury Wine. However, WA1 Resources is 2.74 times more volatile than Treasury Wine Estates. It trades about 0.16 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.26 per unit of risk. If you would invest 1,299 in WA1 Resources on September 12, 2024 and sell it today you would earn a total of 153.00 from holding WA1 Resources or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WA1 Resources vs. Treasury Wine Estates
Performance |
| Timeline |
| WA1 Resources |
| Treasury Wine Estates |
WA1 Resources and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WA1 Resources and Treasury Wine
The main advantage of trading using opposite WA1 Resources and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA1 Resources position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| WA1 Resources vs. Hansen Technologies | WA1 Resources vs. Queste Communications | WA1 Resources vs. WiseTech Global Limited | WA1 Resources vs. Srj Technologies Group |
| Treasury Wine vs. Tlou Energy | Treasury Wine vs. Southern Cross Gold | Treasury Wine vs. Minbos Resources | Treasury Wine vs. Elevate Uranium |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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