Correlation Between ITALIAN WINE and TransAlta

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

By analyzing existing cross correlation between ITALIAN WINE BRANDS and TransAlta, you can compare the effects of market volatilities on ITALIAN WINE and TransAlta 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 ITALIAN WINE with a short position of TransAlta. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and TransAlta.

Diversification Opportunities for ITALIAN WINE and TransAlta

0.26

Correlation Coefficient

ITALIAN WINE  TransAlta

Modest diversification

The 3 months correlation between ITALIAN and TransAlta is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta and ITALIAN 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 ITALIAN WINE BRANDS are associated (or correlated) with TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and TransAlta go up and down completely randomly.

Pair Corralation between ITALIAN WINE and TransAlta

If you would invest  2,220  in ITALIAN WINE BRANDS on September 21, 2024 and sell it today you would earn a total of  10.00  from holding ITALIAN WINE BRANDS or generate 0.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

ITALIAN WINE BRANDS  vs.  TransAlta

ITALIAN WINE BRANDS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITALIAN WINE BRANDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ITALIAN WINE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TransAlta

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days TransAlta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, TransAlta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITALIAN WINE and TransAlta

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

The idea behind ITALIAN WINE BRANDS and TransAlta 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..