Correlation Between Willamette Valley and Joint Stock
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Joint Stock 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 Joint Stock 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 Joint Stock, you can compare the effects of market volatilities on Willamette Valley and Joint Stock 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 Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Joint Stock.
Diversification Opportunities for Willamette Valley and Joint Stock
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Willamette and Joint is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Willamette Valley i.e., Willamette Valley and Joint Stock go up and down completely randomly.
Pair Corralation between Willamette Valley and Joint Stock
Assuming the 90 days horizon Willamette Valley is expected to generate 2.76 times less return on investment than Joint Stock. In addition to that, Willamette Valley is 1.28 times more volatile than Joint Stock. It trades about 0.02 of its total potential returns per unit of risk. Joint Stock is currently generating about 0.08 per unit of volatility. If you would invest 9,551 in Joint Stock on November 8, 2024 and sell it today you would earn a total of 249.00 from holding Joint Stock or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Joint Stock
Performance |
| Timeline |
| Willamette Valley |
| Joint Stock |
Willamette Valley and Joint Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Joint Stock
The main advantage of trading using opposite Willamette Valley and Joint Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Joint Stock 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 Joint Stock will offset losses from the drop in Joint Stock'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 |
| Joint Stock vs. Barrick Gold Corp | Joint Stock vs. Grocery Outlet Holding | Joint Stock vs. Vulcan Materials | Joint Stock vs. CDW Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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