Correlation Between Willamette Valley and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Ambev SA 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 Ambev SA 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 Ambev SA ADR, you can compare the effects of market volatilities on Willamette Valley and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Ambev SA.
Diversification Opportunities for Willamette Valley and Ambev SA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Willamette and Ambev is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Willamette Valley i.e., Willamette Valley and Ambev SA go up and down completely randomly.
Pair Corralation between Willamette Valley and Ambev SA
Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 1.79 times more return on investment than Ambev SA. However, Willamette Valley is 1.79 times more volatile than Ambev SA ADR. It trades about -0.01 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.05 per unit of risk. If you would invest 387.00 in Willamette Valley Vineyards on October 12, 2024 and sell it today you would lose (42.00) from holding Willamette Valley Vineyards or give up 10.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Ambev SA ADR
Performance |
| Timeline |
| Willamette Valley |
| Ambev SA ADR |
Willamette Valley and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Ambev SA
The main advantage of trading using opposite Willamette Valley and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Brown Forman | Willamette Valley vs. Treasury Wine Estates |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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