Correlation Between AMAZON and Willamette Valley
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By analyzing existing cross correlation between AMAZON INC 52 and Willamette Valley Vineyards, you can compare the effects of market volatilities on AMAZON 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 AMAZON with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAZON and Willamette Valley.
Diversification Opportunities for AMAZON and Willamette Valley
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AMAZON and Willamette is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AMAZON INC 52 and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and AMAZON 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 AMAZON INC 52 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 AMAZON i.e., AMAZON and Willamette Valley go up and down completely randomly.
Pair Corralation between AMAZON and Willamette Valley
Assuming the 90 days trading horizon AMAZON INC 52 is expected to generate 0.13 times more return on investment than Willamette Valley. However, AMAZON INC 52 is 7.93 times less risky than Willamette Valley. It trades about -0.06 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.11 per unit of risk. If you would invest 10,118 in AMAZON INC 52 on September 12, 2024 and sell it today you would lose (77.00) from holding AMAZON INC 52 or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
AMAZON INC 52 vs. Willamette Valley Vineyards
Performance |
| Timeline |
| AMAZON INC 52 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Willamette Valley |
AMAZON and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMAZON and Willamette Valley
The main advantage of trading using opposite AMAZON and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAZON 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 AMAZON INC 52 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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