Correlation Between Treasury Wine and Infinity Pharmaceuticals

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

Diversification Opportunities for Treasury Wine and Infinity Pharmaceuticals

0.0

Correlation Coefficient

Treasury Wine  Infinity Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Treasury and Infinity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Infinity Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Pharmaceuticals 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 Infinity Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Pharmaceuticals has no effect on the direction of Treasury Wine i.e., Treasury Wine and Infinity Pharmaceuticals go up and down completely randomly.

Pair Corralation between Treasury Wine and Infinity Pharmaceuticals

Assuming the 90 days horizon Treasury Wine is expected to generate 62.24 times less return on investment than Infinity Pharmaceuticals. But when comparing it to its historical volatility, Treasury Wine Estates is 24.21 times less risky than Infinity Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Infinity Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Infinity Pharmaceuticals on September 12, 2024 and sell it today you would lose (19.99) from holding Infinity Pharmaceuticals or give up 99.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	67.33%
Values	Daily Returns

Treasury Wine Estates  vs.  Infinity Pharmaceuticals

Treasury Wine Estates

Risk-Adjusted Performance

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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.

Infinity Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinity Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Infinity Pharmaceuticals is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Treasury Wine and Infinity Pharmaceuticals

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

The idea behind Treasury Wine Estates and Infinity Pharmaceuticals 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.