Correlation Between Willamette Valley and Global Net
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Willamette Valley and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Global Net.
Diversification Opportunities for Willamette Valley and Global Net
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Willamette and Global is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Willamette Valley i.e., Willamette Valley and Global Net go up and down completely randomly.
Pair Corralation between Willamette Valley and Global Net
Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the Global Net. In addition to that, Willamette Valley is 2.03 times more volatile than Global Net Lease. It trades about -0.01 of its total potential returns per unit of risk. Global Net Lease is currently generating about 0.09 per unit of volatility. If you would invest 1,674 in Global Net Lease on November 6, 2024 and sell it today you would earn a total of 604.00 from holding Global Net Lease or generate 36.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Global Net Lease
Performance |
| Timeline |
| Willamette Valley |
| Global Net Lease |
Willamette Valley and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Global Net
The main advantage of trading using opposite Willamette Valley and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net'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 |
| Global Net vs. AKITA Drilling | Global Net vs. Tenaris SA ADR | Global Net vs. Sable Offshore Corp | Global Net vs. Seadrill Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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