Correlation Between Willamette Valley and American Hotel
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and American Hotel 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 Willamette Valley and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willamette Valley Vineyards and American Hotel Income, you can compare the effects of market volatilities on Willamette Valley and American Hotel 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 Willamette Valley with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and American Hotel.
Diversification Opportunities for Willamette Valley and American Hotel
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Willamette and American is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Willamette Valley 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 Willamette Valley Vineyards are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Willamette Valley i.e., Willamette Valley and American Hotel go up and down completely randomly.
Pair Corralation between Willamette Valley and American Hotel
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 0.38 times more return on investment than American Hotel. However, Willamette Valley Vineyards is 2.64 times less risky than American Hotel. It trades about -0.08 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.05 per unit of risk. If you would invest 596.00 in Willamette Valley Vineyards on September 12, 2024 and sell it today you would lose (271.00) from holding Willamette Valley Vineyards or give up 45.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.37% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. American Hotel Income
Performance |
| Timeline |
| Willamette Valley |
| American Hotel Income |
Willamette Valley and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and American Hotel
The main advantage of trading using opposite Willamette Valley and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Willamette Valley Vineyards | Willamette Valley vs. Splash Beverage Group |
| American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Braemar Hotels Resorts | American Hotel vs. Braemar Hotels Resorts |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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