Correlation Between Treasury Wine and BKI Investment

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

Diversification Opportunities for Treasury Wine and BKI Investment

0.24

Correlation Coefficient

Treasury Wine  BKI Investment

Modest diversification

The 3 months correlation between Treasury and BKI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Treasury Wine i.e., Treasury Wine and BKI Investment go up and down completely randomly.

Pair Corralation between Treasury Wine and BKI Investment

Assuming the 90 days trading horizon Treasury Wine Estates is expected to under-perform the BKI Investment. In addition to that, Treasury Wine is 1.91 times more volatile than BKI Investment. It trades about -0.11 of its total potential returns per unit of risk. BKI Investment is currently generating about -0.01 per unit of volatility. If you would invest  166.00  in BKI Investment on December 29, 2024 and sell it today you would lose (1.00) from holding BKI Investment or give up 0.6% of portfolio value over 90 days.

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

Treasury Wine Estates  vs.  BKI Investment

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.

BKI Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days BKI Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, BKI Investment 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 BKI Investment

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

The idea behind Treasury Wine Estates and BKI Investment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..