Correlation Between Vita Coco and Willamette Valley

Can any of the company-specific risk be diversified away by investing in both Vita Coco and Willamette Valley 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 Vita Coco and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vita Coco and Willamette Valley Vineyards, you can compare the effects of market volatilities on Vita Coco and Willamette Valley 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 Vita Coco with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Willamette Valley.

Diversification Opportunities for Vita Coco and Willamette Valley

0.15

Correlation Coefficient

Vita Coco  Willamette Valley

Average diversification

The 3 months correlation between Vita and Willamette is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Vita Coco 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 Vita Coco are associated (or correlated) with Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Vita Coco i.e., Vita Coco and Willamette Valley go up and down completely randomly.

Pair Corralation between Vita Coco and Willamette Valley

Given the investment horizon of 90 days Vita Coco is expected to under-perform the Willamette Valley. But the stock apears to be less risky and, when comparing its historical volatility, Vita Coco is 1.34 times less risky than Willamette Valley. The stock trades about -0.09 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Willamette Valley Vineyards on December 29, 2024 and sell it today you would earn a total of  265.00  from holding Willamette Valley Vineyards or generate 77.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vita Coco  vs.  Willamette Valley Vineyards

Vita Coco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vita Coco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Willamette Valley

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Willamette Valley demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vita Coco and Willamette Valley

The main advantage of trading using opposite Vita Coco and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.

The idea behind Vita Coco and Willamette Valley Vineyards pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.