Correlation Between KVH Industries and Willamette Valley

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

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

Diversification Opportunities for KVH Industries and Willamette Valley

0.25

Correlation Coefficient

KVH Industries  Willamette Valley

Modest diversification

The 3 months correlation between KVH and Willamette is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Willamette Valley go up and down completely randomly.

Pair Corralation between KVH Industries and Willamette Valley

Given the investment horizon of 90 days KVH Industries is expected to under-perform the Willamette Valley. But the stock apears to be less risky and, when comparing its historical volatility, KVH Industries is 1.02 times less risky than Willamette Valley. The stock trades about -0.02 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  463.00  in Willamette Valley Vineyards on October 27, 2024 and sell it today you would lose (108.00) from holding Willamette Valley Vineyards or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

KVH Industries  vs.  Willamette Valley Vineyards

KVH Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Willamette Valley

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Willamette Valley may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KVH Industries and Willamette Valley

The main advantage of trading using opposite KVH Industries and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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 KVH Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.