Correlation Between Willamette Valley and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Treasury 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 Treasury 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 Treasury Wine Estates, you can compare the effects of market volatilities on Willamette Valley and Treasury 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Treasury Wine.
Diversification Opportunities for Willamette Valley and Treasury Wine
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Willamette and Treasury is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Willamette Valley i.e., Willamette Valley and Treasury Wine go up and down completely randomly.
Pair Corralation between Willamette Valley and Treasury Wine
Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 1.49 times more return on investment than Treasury Wine. However, Willamette Valley is 1.49 times more volatile than Treasury Wine Estates. It trades about 0.1 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.11 per unit of risk. If you would invest 357.00 in Willamette Valley Vineyards on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Willamette Valley Vineyards or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Treasury Wine Estates
Performance |
| Timeline |
| Willamette Valley |
| Treasury Wine Estates |
Willamette Valley and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Treasury Wine
The main advantage of trading using opposite Willamette Valley and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Treasury 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 Treasury Wine will offset losses from the drop in Treasury 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 |
| Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Constellation Brands Class | Treasury Wine vs. Morningstar Unconstrained Allocation | Treasury Wine vs. SEI Investments |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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