Correlation Between Willamette Valley and China Eastern
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and China Eastern 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 China Eastern 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 China Eastern Airlines, you can compare the effects of market volatilities on Willamette Valley and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and China Eastern.
Diversification Opportunities for Willamette Valley and China Eastern
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Willamette and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Willamette Valley i.e., Willamette Valley and China Eastern go up and down completely randomly.
Pair Corralation between Willamette Valley and China Eastern
If you would invest 1,998 in China Eastern Airlines on September 3, 2024 and sell it today you would earn a total of 0.00 from holding China Eastern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. China Eastern Airlines
Performance |
| Timeline |
| Willamette Valley |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Willamette Valley and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and China Eastern
The main advantage of trading using opposite Willamette Valley and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
| China Eastern vs. Arrow Electronics | China Eastern vs. Ambev SA ADR | China Eastern vs. Asure Software | China Eastern vs. Molson Coors Brewing |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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