Correlation Between Treasury Wine and Joint Stock

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

Diversification Opportunities for Treasury Wine and Joint Stock

0.26

Correlation Coefficient

Treasury Wine  Joint Stock

Modest diversification

The 3 months correlation between Treasury and Joint is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Treasury Wine i.e., Treasury Wine and Joint Stock go up and down completely randomly.

Pair Corralation between Treasury Wine and Joint Stock

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.69 times more return on investment than Joint Stock. However, Treasury Wine Estates is 1.46 times less risky than Joint Stock. It trades about -0.25 of its potential returns per unit of risk. Joint Stock is currently generating about -0.26 per unit of risk. If you would invest  735.00  in Treasury Wine Estates on October 4, 2024 and sell it today you would lose (45.00) from holding Treasury Wine Estates or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Treasury Wine Estates  vs.  Joint Stock

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

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Treasury Wine and Joint Stock

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

The idea behind Treasury Wine Estates and Joint Stock 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.