Correlation Between Global Net and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Willamette Valley Vineyards, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Willamette Valley.
Diversification Opportunities for Global Net and Willamette Valley
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Willamette is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and Willamette Valley go up and down completely randomly.
Pair Corralation between Global Net and Willamette Valley
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.52 times more return on investment than Willamette Valley. However, Global Net Lease is 1.94 times less risky than Willamette Valley. It trades about 0.1 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.07 per unit of risk. If you would invest 1,786 in Global Net Lease on August 26, 2024 and sell it today you would earn a total of 531.00 from holding Global Net Lease or generate 29.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Global Net Lease |
| Willamette Valley |
Global Net and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Willamette Valley
The main advantage of trading using opposite Global Net and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.| Global Net vs. Willamette Valley Vineyards | Global Net vs. Ambev SA ADR | Global Net vs. Integral Ad Science | Global Net vs. Playtika Holding Corp |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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