Correlation Between Treasury Wine and Nike

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

Diversification Opportunities for Treasury Wine and Nike

0.3

Correlation Coefficient

Treasury Wine  Nike

Weak diversification

The 3 months correlation between Treasury and Nike is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Treasury Wine i.e., Treasury Wine and Nike go up and down completely randomly.

Pair Corralation between Treasury Wine and Nike

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.98 times more return on investment than Nike. However, Treasury Wine Estates is 1.02 times less risky than Nike. It trades about 0.0 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest  752.00  in Treasury Wine Estates on September 18, 2024 and sell it today you would lose (52.00) from holding Treasury Wine Estates or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Treasury Wine Estates  vs.  Nike Inc

Treasury Wine Estates

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nike Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nike Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nike is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Treasury Wine and Nike

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

The idea behind Treasury Wine Estates and Nike 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.