Correlation Between Willamette Valley and Fresh Grapes
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Fresh Grapes 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 Fresh Grapes 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 Fresh Grapes LLC, you can compare the effects of market volatilities on Willamette Valley and Fresh Grapes 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 Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Fresh Grapes.
Diversification Opportunities for Willamette Valley and Fresh Grapes
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willamette and Fresh is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC 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 Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Willamette Valley i.e., Willamette Valley and Fresh Grapes go up and down completely randomly.
Pair Corralation between Willamette Valley and Fresh Grapes
Assuming the 90 days horizon Willamette Valley is expected to generate 1.08 times less return on investment than Fresh Grapes. But when comparing it to its historical volatility, Willamette Valley Vineyards is 3.92 times less risky than Fresh Grapes. It trades about 0.1 of its potential returns per unit of risk. Fresh Grapes LLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Fresh Grapes LLC on August 27, 2024 and sell it today you would lose (5.00) from holding Fresh Grapes LLC or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Fresh Grapes LLC
Performance |
| Timeline |
| Willamette Valley |
| Fresh Grapes LLC |
Willamette Valley and Fresh Grapes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Fresh Grapes
The main advantage of trading using opposite Willamette Valley and Fresh Grapes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Fresh Grapes 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 Fresh Grapes will offset losses from the drop in Fresh Grapes' 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 |
| Fresh Grapes vs. Andrew Peller Limited | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. The Tinley Beverage |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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