Correlation Between Treasury Wine and 191216CR9

Can any of the company-specific risk be diversified away by investing in both Treasury Wine and 191216CR9 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 191216CR9 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 COCA COLA CO, you can compare the effects of market volatilities on Treasury Wine and 191216CR9 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 191216CR9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and 191216CR9.

Diversification Opportunities for Treasury Wine and 191216CR9

-0.49

Correlation Coefficient

Treasury Wine  191216CR9

Very good diversification

The 3 months correlation between Treasury and 191216CR9 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CR9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Treasury Wine i.e., Treasury Wine and 191216CR9 go up and down completely randomly.

Pair Corralation between Treasury Wine and 191216CR9

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the 191216CR9. In addition to that, Treasury Wine is 9.28 times more volatile than COCA COLA CO. It trades about -0.11 of its total potential returns per unit of risk. COCA COLA CO is currently generating about -0.05 per unit of volatility. If you would invest  9,784  in COCA COLA CO on December 26, 2024 and sell it today you would lose (81.00) from holding COCA COLA CO or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Treasury Wine Estates  vs.  COCA COLA CO

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 weak 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.

COCA A CO

Risk-Adjusted Performance

Modest

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CR9 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 191216CR9

The main advantage of trading using opposite Treasury Wine and 191216CR9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, 191216CR9 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 191216CR9 will offset losses from the drop in 191216CR9's long position.

The idea behind Treasury Wine Estates and COCA COLA CO 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.