Correlation Between Willamette Valley and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Consumer Staples 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 Consumer Staples 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 Consumer Staples Portfolio, you can compare the effects of market volatilities on Willamette Valley and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Consumer Staples.
Diversification Opportunities for Willamette Valley and Consumer Staples
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Willamette and Consumer is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Willamette Valley i.e., Willamette Valley and Consumer Staples go up and down completely randomly.
Pair Corralation between Willamette Valley and Consumer Staples
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 3.75 times more return on investment than Consumer Staples. However, Willamette Valley is 3.75 times more volatile than Consumer Staples Portfolio. It trades about 0.27 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.15 per unit of risk. If you would invest 334.00 in Willamette Valley Vineyards on November 9, 2024 and sell it today you would earn a total of 266.00 from holding Willamette Valley Vineyards or generate 79.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Willamette Valley |
| Consumer Staples Por |
Willamette Valley and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Consumer Staples
The main advantage of trading using opposite Willamette Valley and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' 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 |
| Consumer Staples vs. United Kingdom Small | Consumer Staples vs. Nuveen Small Cap | Consumer Staples vs. Jhvit International Small | Consumer Staples vs. Cardinal Small Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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