Correlation Between Safety Shot and Treasury Wine

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

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

Diversification Opportunities for Safety Shot and Treasury Wine

0.6

Correlation Coefficient

Safety Shot  Treasury Wine

Poor diversification

The 3 months correlation between Safety and Treasury is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot 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 Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and Treasury Wine go up and down completely randomly.

Pair Corralation between Safety Shot and Treasury Wine

Given the investment horizon of 90 days Safety Shot is expected to generate 2.04 times more return on investment than Treasury Wine. However, Safety Shot is 2.04 times more volatile than Treasury Wine Estates. It trades about 0.04 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.0 per unit of risk. If you would invest  77.00  in Safety Shot on September 23, 2024 and sell it today you would lose (5.00) from holding Safety Shot or give up 6.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.86%
Values	Daily Returns

Safety Shot  vs.  Treasury Wine Estates

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Safety Shot and Treasury Wine

The main advantage of trading using opposite Safety Shot and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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 Safety Shot 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.