Correlation Between Thai Oil and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Thai Oil 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 Thai Oil and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Oil Public and Willamette Valley Vineyards, you can compare the effects of market volatilities on Thai Oil 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 Thai Oil with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Willamette Valley.
Diversification Opportunities for Thai Oil and Willamette Valley
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thai and Willamette is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Thai Oil 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 Thai Oil Public 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 Thai Oil i.e., Thai Oil and Willamette Valley go up and down completely randomly.
Pair Corralation between Thai Oil and Willamette Valley
Assuming the 90 days horizon Thai Oil Public is expected to generate 1.01 times more return on investment than Willamette Valley. However, Thai Oil is 1.01 times more volatile than Willamette Valley Vineyards. It trades about 0.05 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.06 per unit of risk. If you would invest 130.00 in Thai Oil Public on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Thai Oil Public or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 31.45% |
| Values | Daily Returns |
Thai Oil Public vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Thai Oil Public |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Willamette Valley |
Thai Oil and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Oil and Willamette Valley
The main advantage of trading using opposite Thai Oil and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil 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.The idea behind Thai Oil Public and Willamette Valley Vineyards pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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