Correlation Between Willamette Valley and Crimson Wine
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Crimson Wine 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 Crimson Wine 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 Crimson Wine, you can compare the effects of market volatilities on Willamette Valley and Crimson Wine 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 Crimson Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Crimson Wine.
Diversification Opportunities for Willamette Valley and Crimson Wine
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Willamette and Crimson is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Crimson Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crimson Wine 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 Crimson Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crimson Wine has no effect on the direction of Willamette Valley i.e., Willamette Valley and Crimson Wine go up and down completely randomly.
Pair Corralation between Willamette Valley and Crimson Wine
Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the Crimson Wine. In addition to that, Willamette Valley is 1.57 times more volatile than Crimson Wine. It trades about -0.01 of its total potential returns per unit of risk. Crimson Wine is currently generating about 0.02 per unit of volatility. If you would invest 581.00 in Crimson Wine on August 28, 2024 and sell it today you would earn a total of 74.00 from holding Crimson Wine or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Crimson Wine
Performance |
| Timeline |
| Willamette Valley |
| Crimson Wine |
Willamette Valley and Crimson Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Crimson Wine
The main advantage of trading using opposite Willamette Valley and Crimson Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Crimson Wine 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 Crimson Wine will offset losses from the drop in Crimson Wine'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 |
| Crimson Wine vs. Embotelladora Andina SA | Crimson Wine vs. Signet International Holdings | Crimson Wine vs. National Beverage Corp | Crimson Wine vs. PT Astra International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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