Correlation Between Treasury Wine and Edgewell Personal

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

Diversification Opportunities for Treasury Wine and Edgewell Personal

-0.57

Correlation Coefficient

Treasury Wine  Edgewell Personal

Excellent diversification

The 3 months correlation between Treasury and Edgewell is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Treasury Wine i.e., Treasury Wine and Edgewell Personal go up and down completely randomly.

Pair Corralation between Treasury Wine and Edgewell Personal

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Edgewell Personal. In addition to that, Treasury Wine is 1.78 times more volatile than Edgewell Personal Care. It trades about -0.1 of its total potential returns per unit of risk. Edgewell Personal Care is currently generating about 0.07 per unit of volatility. If you would invest  3,474  in Edgewell Personal Care on September 17, 2024 and sell it today you would earn a total of  70.00  from holding Edgewell Personal Care or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Treasury Wine Estates  vs.  Edgewell Personal Care

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. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Edgewell Personal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Treasury Wine and Edgewell Personal

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

The idea behind Treasury Wine Estates and Edgewell Personal Care 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.