Correlation Between Treasury Wine and Strategic Investments

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

Diversification Opportunities for Treasury Wine and Strategic Investments

0.08

Correlation Coefficient

Treasury Wine  Strategic Investments

Significant diversification

The 3 months correlation between Treasury and Strategic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Treasury Wine i.e., Treasury Wine and Strategic Investments go up and down completely randomly.

Pair Corralation between Treasury Wine and Strategic Investments

Assuming the 90 days horizon Treasury Wine is expected to generate 1.03 times less return on investment than Strategic Investments. But when comparing it to its historical volatility, Treasury Wine Estates is 2.27 times less risky than Strategic Investments. It trades about 0.03 of its potential returns per unit of risk. Strategic Investments AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Strategic Investments AS on September 25, 2024 and sell it today you would lose (1.00) from holding Strategic Investments AS or give up 6.67% of portfolio value over 90 days.

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

Treasury Wine Estates  vs.  Strategic Investments AS

Treasury Wine Estates

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Treasury Wine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Strategic Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Strategic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Treasury Wine and Strategic Investments

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

The idea behind Treasury Wine Estates and Strategic Investments AS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.