Correlation Between Willamette Valley and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Whitbread Plc 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 Whitbread Plc 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 Whitbread plc, you can compare the effects of market volatilities on Willamette Valley and Whitbread Plc 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 Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Whitbread Plc.
Diversification Opportunities for Willamette Valley and Whitbread Plc
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willamette and Whitbread is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc 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 Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Willamette Valley i.e., Willamette Valley and Whitbread Plc go up and down completely randomly.
Pair Corralation between Willamette Valley and Whitbread Plc
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Whitbread Plc. In addition to that, Willamette Valley is 1.16 times more volatile than Whitbread plc. It trades about -0.07 of its total potential returns per unit of risk. Whitbread plc is currently generating about -0.04 per unit of volatility. If you would invest 4,392 in Whitbread plc on September 14, 2024 and sell it today you would lose (668.00) from holding Whitbread plc or give up 15.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.46% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Whitbread plc
Performance |
| Timeline |
| Willamette Valley |
| Whitbread plc |
Willamette Valley and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Whitbread Plc
The main advantage of trading using opposite Willamette Valley and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Whitbread Plc 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 Whitbread Plc will offset losses from the drop in Whitbread Plc'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 |
| Whitbread Plc vs. Western Acquisition Ventures | Whitbread Plc vs. Transocean | Whitbread Plc vs. Rand Capital Corp | Whitbread Plc vs. Awilco Drilling PLC |
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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