Correlation Between Treasury Wine and MARTIN

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

Diversification Opportunities for Treasury Wine and MARTIN

0.28

Correlation Coefficient

Treasury Wine  MARTIN

Modest diversification

The 3 months correlation between Treasury and MARTIN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and MARTIN MARIETTA MATLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARTIN MARIETTA MATLS 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 MARTIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARTIN MARIETTA MATLS has no effect on the direction of Treasury Wine i.e., Treasury Wine and MARTIN go up and down completely randomly.

Pair Corralation between Treasury Wine and MARTIN

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the MARTIN. In addition to that, Treasury Wine is 9.0 times more volatile than MARTIN MARIETTA MATLS. It trades about -0.07 of its total potential returns per unit of risk. MARTIN MARIETTA MATLS is currently generating about -0.16 per unit of volatility. If you would invest  9,797  in MARTIN MARIETTA MATLS on September 28, 2024 and sell it today you would lose (219.00) from holding MARTIN MARIETTA MATLS or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Treasury Wine Estates  vs.  MARTIN MARIETTA MATLS

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.

MARTIN MARIETTA MATLS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Treasury Wine and MARTIN

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

The idea behind Treasury Wine Estates and MARTIN MARIETTA MATLS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.