Correlation Between Willamette Valley and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Willamette Valley and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Natural Alternatives.
Diversification Opportunities for Willamette Valley and Natural Alternatives
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Willamette and Natural is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Willamette Valley i.e., Willamette Valley and Natural Alternatives go up and down completely randomly.
Pair Corralation between Willamette Valley and Natural Alternatives
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Natural Alternatives. But the stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 2.37 times less risky than Natural Alternatives. The stock trades about -0.13 of its potential returns per unit of risk. The Natural Alternatives International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 457.00 in Natural Alternatives International on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Natural Alternatives International or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Natural Alternatives Internati
Performance |
| Timeline |
| Willamette Valley |
| Natural Alternatives |
Willamette Valley and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Natural Alternatives
The main advantage of trading using opposite Willamette Valley and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' 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 |
| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Lifeway Foods |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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