Correlation Between Plexus Corp and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Plexus Corp 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 Plexus Corp and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plexus Corp and Willamette Valley Vineyards, you can compare the effects of market volatilities on Plexus Corp 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 Plexus Corp with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plexus Corp and Willamette Valley.
Diversification Opportunities for Plexus Corp and Willamette Valley
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Plexus and Willamette is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Plexus Corp 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 Plexus Corp 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 Plexus Corp i.e., Plexus Corp and Willamette Valley go up and down completely randomly.
Pair Corralation between Plexus Corp and Willamette Valley
Given the investment horizon of 90 days Plexus Corp is expected to generate 0.86 times more return on investment than Willamette Valley. However, Plexus Corp is 1.16 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 10,688 in Plexus Corp on September 14, 2024 and sell it today you would earn a total of 5,938 from holding Plexus Corp or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plexus Corp vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Plexus Corp |
| Willamette Valley |
Plexus Corp and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plexus Corp and Willamette Valley
The main advantage of trading using opposite Plexus Corp and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plexus Corp 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.| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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