Correlation Between Naked Wines and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Naked Wines 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 Naked Wines and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and Willamette Valley Vineyards, you can compare the effects of market volatilities on Naked Wines 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 Naked Wines with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Willamette Valley.
Diversification Opportunities for Naked Wines and Willamette Valley
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Naked and Willamette is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Naked Wines 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 Naked Wines plc 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 Naked Wines i.e., Naked Wines and Willamette Valley go up and down completely randomly.
Pair Corralation between Naked Wines and Willamette Valley
Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Willamette Valley. In addition to that, Naked Wines is 2.48 times more volatile than Willamette Valley Vineyards. It trades about -0.01 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.01 per unit of volatility. If you would invest 470.00 in Willamette Valley Vineyards on November 2, 2024 and sell it today you would lose (138.00) from holding Willamette Valley Vineyards or give up 29.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Naked Wines plc vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Naked Wines plc |
| Willamette Valley |
Naked Wines and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Willamette Valley
The main advantage of trading using opposite Naked Wines and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines 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.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Brown Forman | Willamette Valley vs. Treasury Wine Estates |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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