Correlation Between Willamette Valley and Leef Brands
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Leef Brands 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 Leef Brands 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 Leef Brands, you can compare the effects of market volatilities on Willamette Valley and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Leef Brands.
Diversification Opportunities for Willamette Valley and Leef Brands
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Willamette and Leef is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Willamette Valley i.e., Willamette Valley and Leef Brands go up and down completely randomly.
Pair Corralation between Willamette Valley and Leef Brands
Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 0.17 times more return on investment than Leef Brands. However, Willamette Valley Vineyards is 5.98 times less risky than Leef Brands. It trades about 0.12 of its potential returns per unit of risk. Leef Brands is currently generating about -0.03 per unit of risk. If you would invest 335.00 in Willamette Valley Vineyards on October 25, 2024 and sell it today you would earn a total of 14.00 from holding Willamette Valley Vineyards or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Leef Brands
Performance |
| Timeline |
| Willamette Valley |
| Leef Brands |
Willamette Valley and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Leef Brands
The main advantage of trading using opposite Willamette Valley and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' 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 |
| Leef Brands vs. High Performance Beverages | Leef Brands vs. Willamette Valley Vineyards | Leef Brands vs. Globalfoundries | Leef Brands vs. Teradyne |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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