Correlation Between Borealis Foods and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Borealis Foods and Willamette Valley 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 Borealis Foods and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borealis Foods and Willamette Valley Vineyards, you can compare the effects of market volatilities on Borealis Foods and Willamette Valley 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 Borealis Foods with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borealis Foods and Willamette Valley.
Diversification Opportunities for Borealis Foods and Willamette Valley
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Borealis and Willamette is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Borealis Foods and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Borealis Foods 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 Borealis Foods are associated (or correlated) with Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Borealis Foods i.e., Borealis Foods and Willamette Valley go up and down completely randomly.
Pair Corralation between Borealis Foods and Willamette Valley
Assuming the 90 days horizon Borealis Foods is expected to generate 5.57 times more return on investment than Willamette Valley. However, Borealis Foods is 5.57 times more volatile than Willamette Valley Vineyards. It trades about 0.08 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.03 per unit of risk. If you would invest 6.50 in Borealis Foods on August 27, 2024 and sell it today you would earn a total of 0.50 from holding Borealis Foods or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Borealis Foods vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Borealis Foods |
| Willamette Valley |
Borealis Foods and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borealis Foods and Willamette Valley
The main advantage of trading using opposite Borealis Foods and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borealis Foods position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.| Borealis Foods vs. Lamb Weston Holdings | Borealis Foods vs. Westrock Coffee | Borealis Foods vs. Farmmi Inc | Borealis Foods vs. Farmer Bros Co |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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