Correlation Between Treasury Wine and 126408GW7

Can any of the company-specific risk be diversified away by investing in both Treasury Wine and 126408GW7 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 126408GW7 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 CSX P 475, you can compare the effects of market volatilities on Treasury Wine and 126408GW7 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 126408GW7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and 126408GW7.

Diversification Opportunities for Treasury Wine and 126408GW7

0.57

Correlation Coefficient

Treasury Wine  126408GW7

Very weak diversification

The 3 months correlation between Treasury and 126408GW7 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and CSX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 475 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 126408GW7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 475 has no effect on the direction of Treasury Wine i.e., Treasury Wine and 126408GW7 go up and down completely randomly.

Pair Corralation between Treasury Wine and 126408GW7

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the 126408GW7. In addition to that, Treasury Wine is 1.77 times more volatile than CSX P 475. It trades about -0.09 of its total potential returns per unit of risk. CSX P 475 is currently generating about -0.03 per unit of volatility. If you would invest  9,537  in CSX P 475 on October 9, 2024 and sell it today you would lose (198.00) from holding CSX P 475 or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.69%
Values	Daily Returns

Treasury Wine Estates  vs.  CSX P 475

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.

CSX P 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX P 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126408GW7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Treasury Wine and 126408GW7

The main advantage of trading using opposite Treasury Wine and 126408GW7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, 126408GW7 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 126408GW7 will offset losses from the drop in 126408GW7's long position.

The idea behind Treasury Wine Estates and CSX P 475 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.