Correlation Between Treasury Wine and CSL

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

Diversification Opportunities for Treasury Wine and CSL

0.52

Correlation Coefficient

Treasury Wine  CSL

Very weak diversification

The 3 months correlation between Treasury and CSL is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Treasury Wine i.e., Treasury Wine and CSL go up and down completely randomly.

Pair Corralation between Treasury Wine and CSL

Assuming the 90 days trading horizon Treasury Wine Estates is expected to under-perform the CSL. In addition to that, Treasury Wine is 1.93 times more volatile than CSL. It trades about -0.15 of its total potential returns per unit of risk. CSL is currently generating about 0.12 per unit of volatility. If you would invest  28,128  in CSL on October 10, 2024 and sell it today you would earn a total of  442.00  from holding CSL or generate 1.57% return on investment over 90 days.

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

Treasury Wine Estates  vs.  CSL

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. 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.

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Treasury Wine Estates and CSL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.