Correlation Between Treasury Wine and APPLIED MATERIALS

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

Diversification Opportunities for Treasury Wine and APPLIED MATERIALS

-0.57

Correlation Coefficient

Treasury Wine  APPLIED MATERIALS

Excellent diversification

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

Pair Corralation between Treasury Wine and APPLIED MATERIALS

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the APPLIED MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.54 times less risky than APPLIED MATERIALS. The stock trades about -0.06 of its potential returns per unit of risk. The APPLIED MATERIALS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13,099  in APPLIED MATERIALS on April 24, 2025 and sell it today you would earn a total of  2,823  from holding APPLIED MATERIALS or generate 21.55% return on investment over 90 days.

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

Treasury Wine Estates  vs.  APPLIED MATERIALS

Treasury Wine Estates

Risk-Adjusted Performance

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 nearly stable basic indicators, Treasury Wine is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

APPLIED MATERIALS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, APPLIED MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and APPLIED MATERIALS

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

The idea behind Treasury Wine Estates and APPLIED MATERIALS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.