Correlation Between Treasury Wine and Judo Capital

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

Diversification Opportunities for Treasury Wine and Judo Capital

-0.37

Correlation Coefficient

Treasury Wine  Judo Capital

Very good diversification

The 3 months correlation between Treasury and Judo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Judo Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Judo Capital Holdings 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 Judo Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Judo Capital Holdings has no effect on the direction of Treasury Wine i.e., Treasury Wine and Judo Capital go up and down completely randomly.

Pair Corralation between Treasury Wine and Judo Capital

Assuming the 90 days trading horizon Treasury Wine is expected to generate 2.48 times less return on investment than Judo Capital. In addition to that, Treasury Wine is 1.09 times more volatile than Judo Capital Holdings. It trades about 0.05 of its total potential returns per unit of risk. Judo Capital Holdings is currently generating about 0.12 per unit of volatility. If you would invest  169.00  in Judo Capital Holdings on September 12, 2024 and sell it today you would earn a total of  22.00  from holding Judo Capital Holdings or generate 13.02% return on investment over 90 days.

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

Treasury Wine Estates  vs.  Judo Capital Holdings

Treasury Wine Estates

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Treasury Wine is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Judo Capital Holdings

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Judo Capital Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Judo Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Judo Capital

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

The idea behind Treasury Wine Estates and Judo Capital Holdings 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.