Correlation Between Treasury Wine and Apple

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

Diversification Opportunities for Treasury Wine and Apple

-0.11

Correlation Coefficient

Treasury Wine  Apple

Good diversification

The 3 months correlation between Treasury and Apple is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Treasury Wine i.e., Treasury Wine and Apple go up and down completely randomly.

Pair Corralation between Treasury Wine and Apple

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Apple. In addition to that, Treasury Wine is 1.98 times more volatile than Apple Inc. It trades about -0.1 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.73 per unit of volatility. If you would invest  22,315  in Apple Inc on September 29, 2024 and sell it today you would earn a total of  2,050  from holding Apple Inc or generate 9.19% 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.  Apple Inc

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Apple

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

The idea behind Treasury Wine Estates and Apple Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.