Correlation Between Treasury Wine and Takeda Pharmaceutical

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

Diversification Opportunities for Treasury Wine and Takeda Pharmaceutical

-0.2

Correlation Coefficient

Treasury Wine  Takeda Pharmaceutical

Good diversification

The 3 months correlation between Treasury and Takeda is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of Treasury Wine i.e., Treasury Wine and Takeda Pharmaceutical go up and down completely randomly.

Pair Corralation between Treasury Wine and Takeda Pharmaceutical

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Takeda Pharmaceutical. In addition to that, Treasury Wine is 1.36 times more volatile than Takeda Pharmaceutical. It trades about -0.12 of its total potential returns per unit of risk. Takeda Pharmaceutical is currently generating about 0.15 per unit of volatility. If you would invest  1,230  in Takeda Pharmaceutical on December 22, 2024 and sell it today you would earn a total of  150.00  from holding Takeda Pharmaceutical or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Treasury Wine Estates  vs.  Takeda Pharmaceutical

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Takeda Pharmaceutical

Risk-Adjusted Performance

Good

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

Pair Trading with Treasury Wine and Takeda Pharmaceutical

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

The idea behind Treasury Wine Estates and Takeda Pharmaceutical 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.