Correlation Between Vintage Wine and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Vintage Wine 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 Vintage Wine and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vintage Wine Estates and Willamette Valley Vineyards, you can compare the effects of market volatilities on Vintage Wine 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 Vintage Wine with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vintage Wine and Willamette Valley.
Diversification Opportunities for Vintage Wine and Willamette Valley
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vintage and Willamette is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vintage Wine Estates and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Vintage Wine 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 Vintage Wine Estates 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 Vintage Wine i.e., Vintage Wine and Willamette Valley go up and down completely randomly.
Pair Corralation between Vintage Wine and Willamette Valley
Considering the 90-day investment horizon Vintage Wine Estates is expected to under-perform the Willamette Valley. In addition to that, Vintage Wine is 6.85 times more volatile than Willamette Valley Vineyards. It trades about -0.08 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.07 per unit of volatility. If you would invest 522.00 in Willamette Valley Vineyards on August 24, 2024 and sell it today you would lose (186.00) from holding Willamette Valley Vineyards or give up 35.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.35% |
| Values | Daily Returns |
Vintage Wine Estates vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Vintage Wine Estates |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Willamette Valley |
Vintage Wine and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vintage Wine and Willamette Valley
The main advantage of trading using opposite Vintage Wine and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vintage Wine 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.| Vintage Wine vs. MGP Ingredients | Vintage Wine vs. Brown Forman | Vintage Wine vs. Diageo PLC ADR | Vintage Wine vs. Brown Forman |
| Willamette Valley vs. Willamette Valley Vineyards | Willamette Valley vs. Splash Beverage Group | Willamette Valley vs. Naked Wines plc | 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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