Correlation Between Willamette Valley and Southwest Gas
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Southwest Gas 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 Southwest Gas 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 Southwest Gas Holdings, you can compare the effects of market volatilities on Willamette Valley and Southwest Gas 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 Southwest Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Southwest Gas.
Diversification Opportunities for Willamette Valley and Southwest Gas
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Willamette and Southwest is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Southwest Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Gas Holdings 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 Southwest Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Gas Holdings has no effect on the direction of Willamette Valley i.e., Willamette Valley and Southwest Gas go up and down completely randomly.
Pair Corralation between Willamette Valley and Southwest Gas
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Southwest Gas. In addition to that, Willamette Valley is 1.38 times more volatile than Southwest Gas Holdings. It trades about -0.06 of its total potential returns per unit of risk. Southwest Gas Holdings is currently generating about 0.06 per unit of volatility. If you would invest 5,887 in Southwest Gas Holdings on September 1, 2024 and sell it today you would earn a total of 1,929 from holding Southwest Gas Holdings or generate 32.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Southwest Gas Holdings
Performance |
| Timeline |
| Willamette Valley |
| Southwest Gas Holdings |
Willamette Valley and Southwest Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Southwest Gas
The main advantage of trading using opposite Willamette Valley and Southwest Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Southwest Gas 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 Southwest Gas will offset losses from the drop in Southwest Gas' 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 |
| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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