Correlation Between Kenon Holdings and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings 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 Kenon Holdings and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Willamette Valley Vineyards, you can compare the effects of market volatilities on Kenon Holdings 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 Kenon Holdings with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Willamette Valley.
Diversification Opportunities for Kenon Holdings and Willamette Valley
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kenon and Willamette is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings i.e., Kenon Holdings and Willamette Valley go up and down completely randomly.
Pair Corralation between Kenon Holdings and Willamette Valley
Considering the 90-day investment horizon Kenon Holdings is expected to generate 1.11 times more return on investment than Willamette Valley. However, Kenon Holdings is 1.11 times more volatile than Willamette Valley Vineyards. It trades about 0.03 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 2,409 in Kenon Holdings on August 24, 2024 and sell it today you would earn a total of 438.00 from holding Kenon Holdings or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Kenon Holdings |
| Willamette Valley |
Kenon Holdings and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Willamette Valley
The main advantage of trading using opposite Kenon Holdings and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings 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.| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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