Correlation Between Crimson Wine and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Crimson Wine 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 Crimson Wine and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crimson Wine and Willamette Valley Vineyards, you can compare the effects of market volatilities on Crimson Wine 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 Crimson Wine with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Willamette Valley.
Diversification Opportunities for Crimson Wine and Willamette Valley
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Crimson and Willamette is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Crimson 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 Crimson Wine 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 Crimson Wine i.e., Crimson Wine and Willamette Valley go up and down completely randomly.
Pair Corralation between Crimson Wine and Willamette Valley
Given the investment horizon of 90 days Crimson Wine is expected to under-perform the Willamette Valley. But the otc stock apears to be less risky and, when comparing its historical volatility, Crimson Wine is 1.05 times less risky than Willamette Valley. The otc stock trades about -0.11 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 342.00 in Willamette Valley Vineyards on August 24, 2024 and sell it today you would lose (6.00) from holding Willamette Valley Vineyards or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Crimson Wine vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Crimson Wine |
| Willamette Valley |
Crimson Wine and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crimson Wine and Willamette Valley
The main advantage of trading using opposite Crimson Wine and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine 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.| Crimson Wine vs. Embotelladora Andina SA | Crimson Wine vs. Signet International Holdings | Crimson Wine vs. National Beverage Corp | Crimson Wine vs. PT Astra International |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Crimson Wine | Willamette Valley vs. Brown Forman |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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