Correlation Between Fresh Grapes and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Fresh Grapes 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 Fresh Grapes and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresh Grapes LLC and Willamette Valley Vineyards, you can compare the effects of market volatilities on Fresh Grapes 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 Fresh Grapes with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and Willamette Valley.
Diversification Opportunities for Fresh Grapes and Willamette Valley
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fresh and Willamette is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Fresh Grapes 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 Fresh Grapes LLC 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 Fresh Grapes i.e., Fresh Grapes and Willamette Valley go up and down completely randomly.
Pair Corralation between Fresh Grapes and Willamette Valley
Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 3.92 times more return on investment than Willamette Valley. However, Fresh Grapes is 3.92 times more volatile than Willamette Valley Vineyards. It trades about 0.03 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.1 per unit of risk. If you would invest 88.00 in Fresh Grapes LLC on August 27, 2024 and sell it today you would lose (5.00) from holding Fresh Grapes LLC or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresh Grapes LLC vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Fresh Grapes LLC |
| Willamette Valley |
Fresh Grapes and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresh Grapes and Willamette Valley
The main advantage of trading using opposite Fresh Grapes and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Grapes 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.| Fresh Grapes vs. Andrew Peller Limited | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. The Tinley Beverage |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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