Correlation Between Carlton Investments and Treasury Wine

Can any of the company-specific risk be diversified away by investing in both Carlton Investments and Treasury Wine 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 Carlton Investments and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlton Investments and Treasury Wine Estates, you can compare the effects of market volatilities on Carlton Investments and Treasury Wine 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 Carlton Investments with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and Treasury Wine.

Diversification Opportunities for Carlton Investments and Treasury Wine

-0.11

Correlation Coefficient

Carlton Investments  Treasury Wine

Good diversification

The 3 months correlation between Carlton and Treasury is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates and Carlton Investments 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 Carlton Investments are associated (or correlated) with Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Carlton Investments i.e., Carlton Investments and Treasury Wine go up and down completely randomly.

Pair Corralation between Carlton Investments and Treasury Wine

Assuming the 90 days trading horizon Carlton Investments is expected to under-perform the Treasury Wine. But the stock apears to be less risky and, when comparing its historical volatility, Carlton Investments is 1.59 times less risky than Treasury Wine. The stock trades about -0.07 of its potential returns per unit of risk. The Treasury Wine Estates is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Treasury Wine Estates on September 26, 2024 and sell it today you would earn a total of  20.00  from holding Treasury Wine Estates or generate 1.77% return on investment over 90 days.

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

Carlton Investments  vs.  Treasury Wine Estates

Carlton Investments

Risk-Adjusted Performance

3 of 100

Weak

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

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.

Pair Trading with Carlton Investments and Treasury Wine

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

The idea behind Carlton Investments and Treasury Wine Estates 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.