Correlation Between Neogen and Willamette Valley

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

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

Diversification Opportunities for Neogen and Willamette Valley

-0.83

Correlation Coefficient

Neogen  Willamette Valley

Pay attention - limited upside

The 3 months correlation between Neogen and Willamette is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Neogen 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 Neogen 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 Neogen i.e., Neogen and Willamette Valley go up and down completely randomly.

Pair Corralation between Neogen and Willamette Valley

Given the investment horizon of 90 days Neogen is expected to under-perform the Willamette Valley. But the stock apears to be less risky and, when comparing its historical volatility, Neogen is 1.6 times less risky than Willamette Valley. The stock trades about -0.23 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Willamette Valley Vineyards on December 27, 2024 and sell it today you would earn a total of  254.00  from holding Willamette Valley Vineyards or generate 73.2% return on investment over 90 days.

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

Neogen  vs.  Willamette Valley Vineyards

Neogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 18 (%) 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 Neogen and Willamette Valley

The main advantage of trading using opposite Neogen and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen 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 Neogen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.