Correlation Between Treasury Wine and Pandora A/S

Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Pandora A/S 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 Pandora A/S 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 Pandora AS, you can compare the effects of market volatilities on Treasury Wine and Pandora A/S 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 Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Pandora A/S.

Diversification Opportunities for Treasury Wine and Pandora A/S

-0.22

Correlation Coefficient

Treasury Wine  Pandora A/S

Very good diversification

The 3 months correlation between Treasury and Pandora is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Treasury Wine i.e., Treasury Wine and Pandora A/S go up and down completely randomly.

Pair Corralation between Treasury Wine and Pandora A/S

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Pandora A/S. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.13 times less risky than Pandora A/S. The stock trades about 0.0 of its potential returns per unit of risk. The Pandora AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,849  in Pandora AS on September 23, 2024 and sell it today you would earn a total of  12,171  from holding Pandora AS or generate 251.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Treasury Wine Estates  vs.  Pandora AS

Treasury Wine Estates

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Treasury Wine is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pandora A/S

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Pandora A/S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Treasury Wine and Pandora A/S

The main advantage of trading using opposite Treasury Wine and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.

The idea behind Treasury Wine Estates and Pandora AS 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 Transaction History module to view history of all your transactions and understand their impact on performance.