Correlation Between Life360, Common and Treasury Wine

Can any of the company-specific risk be diversified away by investing in both Life360, Common 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 Life360, Common and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Life360, Common Stock and Treasury Wine Estates, you can compare the effects of market volatilities on Life360, Common 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 Life360, Common with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life360, Common and Treasury Wine.

Diversification Opportunities for Life360, Common and Treasury Wine

-0.22

Correlation Coefficient

Life360, Common  Treasury Wine

Very good diversification

The 3 months correlation between Life360, and Treasury is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Life360, Common Stock 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 Life360, Common 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 Life360, Common Stock 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 Life360, Common i.e., Life360, Common and Treasury Wine go up and down completely randomly.

Pair Corralation between Life360, Common and Treasury Wine

Considering the 90-day investment horizon Life360, Common Stock is expected to under-perform the Treasury Wine. In addition to that, Life360, Common is 2.2 times more volatile than Treasury Wine Estates. It trades about -0.4 of its total potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.25 per unit of volatility. If you would invest  735.00  in Treasury Wine Estates on October 4, 2024 and sell it today you would lose (45.00) from holding Treasury Wine Estates or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Life360, Common Stock  vs.  Treasury Wine Estates

Life360, Common Stock

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Life360, Common Stock are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Life360, Common is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Life360, Common and Treasury Wine

The main advantage of trading using opposite Life360, Common and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life360, Common 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 Life360, Common Stock 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.