Correlation Between Wendys and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Wendys 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 Wendys and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Wendys Co and Willamette Valley Vineyards, you can compare the effects of market volatilities on Wendys 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 Wendys with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Willamette Valley.
Diversification Opportunities for Wendys and Willamette Valley
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wendys and Willamette is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Wendys 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 The Wendys Co 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 Wendys i.e., Wendys and Willamette Valley go up and down completely randomly.
Pair Corralation between Wendys and Willamette Valley
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Willamette Valley. In addition to that, Wendys is 1.94 times more volatile than Willamette Valley Vineyards. It trades about -0.18 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.2 per unit of volatility. If you would invest 352.00 in Willamette Valley Vineyards on August 31, 2024 and sell it today you would lose (17.00) from holding Willamette Valley Vineyards or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Willamette Valley Vineyards
Performance |
| Timeline |
| The Wendys |
| Willamette Valley |
Wendys and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Willamette Valley
The main advantage of trading using opposite Wendys and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys 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.| Wendys vs. Wingstop | Wendys vs. RLJ Lodging Trust | Wendys vs. Aquagold International | Wendys vs. Stepstone Group |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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