Correlation Between Treasury Wine and Sixt SE

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

Diversification Opportunities for Treasury Wine and Sixt SE

-0.54

Correlation Coefficient

Treasury Wine  Sixt SE

Excellent diversification

The 3 months correlation between Treasury and Sixt is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE 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 Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of Treasury Wine i.e., Treasury Wine and Sixt SE go up and down completely randomly.

Pair Corralation between Treasury Wine and Sixt SE

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Sixt SE. In addition to that, Treasury Wine is 1.04 times more volatile than Sixt SE. It trades about -0.1 of its total potential returns per unit of risk. Sixt SE is currently generating about 0.03 per unit of volatility. If you would invest  7,860  in Sixt SE on December 30, 2024 and sell it today you would earn a total of  225.00  from holding Sixt SE or generate 2.86% return on investment over 90 days.

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

Treasury Wine Estates  vs.  Sixt SE

Treasury Wine Estates

Risk-Adjusted Performance

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.

Sixt SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sixt SE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Treasury Wine and Sixt SE

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

The idea behind Treasury Wine Estates and Sixt SE 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.