Correlation Between Vita Coco and Treasury Wine

Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vita Coco and Treasury Wine Estates, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Treasury Wine.

Diversification Opportunities for Vita Coco and Treasury Wine

-0.58

Correlation Coefficient

Vita Coco  Treasury Wine

Excellent diversification

The 3 months correlation between Vita and Treasury is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco 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 Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Treasury Wine go up and down completely randomly.

Pair Corralation between Vita Coco and Treasury Wine

Given the investment horizon of 90 days Vita Coco is expected to generate 0.92 times more return on investment than Treasury Wine. However, Vita Coco is 1.09 times less risky than Treasury Wine. It trades about 0.28 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.02 per unit of risk. If you would invest  2,448  in Vita Coco on September 5, 2024 and sell it today you would earn a total of  1,127  from holding Vita Coco or generate 46.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Vita Coco  vs.  Treasury Wine Estates

Vita Coco

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Treasury Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Treasury Wine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vita Coco and Treasury Wine

The main advantage of trading using opposite Vita Coco and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.

The idea behind Vita Coco and Treasury Wine Estates pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..