Correlation Between Treasury Wine and Clean Energy

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

Diversification Opportunities for Treasury Wine and Clean Energy

-0.47

Correlation Coefficient

Treasury Wine  Clean Energy

Very good diversification

The 3 months correlation between Treasury and Clean is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Treasury Wine i.e., Treasury Wine and Clean Energy go up and down completely randomly.

Pair Corralation between Treasury Wine and Clean Energy

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Clean Energy. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 2.88 times less risky than Clean Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Clean Energy Fuels is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Clean Energy Fuels on April 24, 2025 and sell it today you would earn a total of  51.00  from holding Clean Energy Fuels or generate 40.8% 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.  Clean Energy Fuels

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 latest uncertain 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.

Clean Energy Fuels

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Clean Energy

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

The idea behind Treasury Wine Estates and Clean Energy Fuels 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.