Correlation Between Treasury Wine and Plastic Omnium

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

Diversification Opportunities for Treasury Wine and Plastic Omnium

-0.31

Correlation Coefficient

Treasury Wine  Plastic Omnium

Very good diversification

The 3 months correlation between Treasury and Plastic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Treasury Wine i.e., Treasury Wine and Plastic Omnium go up and down completely randomly.

Pair Corralation between Treasury Wine and Plastic Omnium

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.73 times more return on investment than Plastic Omnium. However, Treasury Wine Estates is 1.36 times less risky than Plastic Omnium. It trades about 0.04 of its potential returns per unit of risk. Plastic Omnium is currently generating about 0.01 per unit of risk. If you would invest  585.00  in Treasury Wine Estates on October 10, 2024 and sell it today you would earn a total of  75.00  from holding Treasury Wine Estates or generate 12.82% 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.  Plastic Omnium

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.

Plastic Omnium

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plastic Omnium are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Plastic Omnium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Plastic Omnium

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

The idea behind Treasury Wine Estates and Plastic Omnium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.