Correlation Between Treasury Wine and Marex Group

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

Diversification Opportunities for Treasury Wine and Marex Group

-0.54

Correlation Coefficient

Treasury Wine  Marex Group

Excellent diversification

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

Pair Corralation between Treasury Wine and Marex Group

Assuming the 90 days horizon Treasury Wine is expected to generate 19.51 times less return on investment than Marex Group. But when comparing it to its historical volatility, Treasury Wine Estates is 1.02 times less risky than Marex Group. It trades about 0.01 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,880  in Marex Group plc on September 13, 2024 and sell it today you would earn a total of  1,212  from holding Marex Group plc or generate 64.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.93%
Values	Daily Returns

Treasury Wine Estates  vs.  Marex Group plc

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 latest weak 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.

Marex Group plc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Marex Group

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

The idea behind Treasury Wine Estates and Marex Group plc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.