Correlation Between Treasury Wine and Bell Financial

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

Diversification Opportunities for Treasury Wine and Bell Financial

0.42

Correlation Coefficient

Treasury Wine  Bell Financial

Very weak diversification

The 3 months correlation between Treasury and Bell is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Bell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Financial Group 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 Bell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Financial Group has no effect on the direction of Treasury Wine i.e., Treasury Wine and Bell Financial go up and down completely randomly.

Pair Corralation between Treasury Wine and Bell Financial

Assuming the 90 days trading horizon Treasury Wine Estates is expected to under-perform the Bell Financial. In addition to that, Treasury Wine is 1.43 times more volatile than Bell Financial Group. It trades about -0.12 of its total potential returns per unit of risk. Bell Financial Group is currently generating about -0.05 per unit of volatility. If you would invest  130.00  in Bell Financial Group on December 22, 2024 and sell it today you would lose (5.00) from holding Bell Financial Group or give up 3.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Treasury Wine Estates  vs.  Bell Financial Group

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. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bell Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bell Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bell Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Treasury Wine and Bell Financial

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

The idea behind Treasury Wine Estates and Bell Financial Group 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.