Correlation Between Willamette Valley and Stepan
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Willamette Valley and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Stepan.
Diversification Opportunities for Willamette Valley and Stepan
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Willamette and Stepan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Willamette Valley i.e., Willamette Valley and Stepan go up and down completely randomly.
Pair Corralation between Willamette Valley and Stepan
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Stepan. In addition to that, Willamette Valley is 1.27 times more volatile than Stepan Company. It trades about -0.07 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.06 per unit of volatility. If you would invest 9,343 in Stepan Company on September 20, 2024 and sell it today you would lose (2,510) from holding Stepan Company or give up 26.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Stepan Company
Performance |
| Timeline |
| Willamette Valley |
| Stepan Company |
Willamette Valley and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Stepan
The main advantage of trading using opposite Willamette Valley and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
| Stepan vs. LyondellBasell Industries NV | Stepan vs. Cabot | Stepan vs. Westlake Chemical | Stepan vs. Air Products and |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |