Correlation Between Willamette Valley and Mission Produce

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Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Mission Produce 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 Mission Produce 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 Mission Produce, you can compare the effects of market volatilities on Willamette Valley and Mission Produce 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 Mission Produce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Mission Produce.

Diversification Opportunities for Willamette Valley and Mission Produce

WillametteMissionDiversified AwayWillametteMissionDiversified Away100%
-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Willamette and Mission is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce 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 Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of Willamette Valley i.e., Willamette Valley and Mission Produce go up and down completely randomly.

Pair Corralation between Willamette Valley and Mission Produce

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 1.23 times more return on investment than Mission Produce. However, Willamette Valley is 1.23 times more volatile than Mission Produce. It trades about 0.15 of its potential returns per unit of risk. Mission Produce is currently generating about 0.0 per unit of risk. If you would invest  559.00  in Willamette Valley Vineyards on November 27, 2024 and sell it today you would earn a total of  33.00  from holding Willamette Valley Vineyards or generate 5.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Willamette Valley Vineyards  vs.  Mission Produce

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20020406080
JavaScript chart by amCharts 3.21.15WVVI AVO
       Timeline  
Willamette Valley 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Willamette Valley demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.544.555.56
Mission Produce 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Mission Produce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mission Produce is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.51212.51313.51414.515

Willamette Valley and Mission Produce Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.68-8.75-5.82-2.88-0.04893.216.539.8513.1716.49 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15WVVI AVO
       Returns  

Pair Trading with Willamette Valley and Mission Produce

The main advantage of trading using opposite Willamette Valley and Mission Produce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Mission Produce 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 Mission Produce will offset losses from the drop in Mission Produce's long position.
The idea behind Willamette Valley Vineyards and Mission Produce 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.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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