Correlation Between SP Global and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both SP Global 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 SP Global and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global Natural and Willamette Valley Vineyards, you can compare the effects of market volatilities on SP Global 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 SP Global with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Willamette Valley.
Diversification Opportunities for SP Global and Willamette Valley
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NRU and Willamette is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SP Global Natural and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and SP Global 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 SP Global Natural 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 SP Global i.e., SP Global and Willamette Valley go up and down completely randomly.
Pair Corralation between SP Global and Willamette Valley
Assuming the 90 days trading horizon SP Global Natural is expected to under-perform the Willamette Valley. But the index apears to be less risky and, when comparing its historical volatility, SP Global Natural is 2.43 times less risky than Willamette Valley. The index trades about -0.18 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 344.00 in Willamette Valley Vineyards on September 3, 2024 and sell it today you would lose (7.00) from holding Willamette Valley Vineyards or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
SP Global Natural vs. Willamette Valley Vineyards
Performance |
| Timeline |
SP Global and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
SP Global Natural
Pair trading matchups for SP Global
Willamette Valley Vineyards
Pair trading matchups for Willamette Valley
Pair Trading with SP Global and Willamette Valley
The main advantage of trading using opposite SP Global and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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.| SP Global vs. Valneva SE ADR | SP Global vs. Waste Management | SP Global vs. NextNav Warrant | SP Global vs. Alvotech |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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