Correlation Between Treasury Wine and Clime Investment

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

Diversification Opportunities for Treasury Wine and Clime Investment

-0.2

Correlation Coefficient

Treasury Wine  Clime Investment

Good diversification

The 3 months correlation between Treasury and Clime is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Treasury Wine i.e., Treasury Wine and Clime Investment go up and down completely randomly.

Pair Corralation between Treasury Wine and Clime Investment

Assuming the 90 days trading horizon Treasury Wine is expected to generate 1.33 times less return on investment than Clime Investment. But when comparing it to its historical volatility, Treasury Wine Estates is 1.75 times less risky than Clime Investment. It trades about 0.09 of its potential returns per unit of risk. Clime Investment Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Clime Investment Management on September 21, 2024 and sell it today you would earn a total of  1.00  from holding Clime Investment Management or generate 2.86% 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.  Clime Investment Management

Treasury Wine Estates

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Treasury Wine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clime Investment Man

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Clime Investment 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 Treasury Wine and Clime Investment

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

The idea behind Treasury Wine Estates and Clime Investment Management 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..