Correlation Between Nova Minerals and Willamette Valley

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

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

Diversification Opportunities for Nova Minerals and Willamette Valley

0.12

Correlation Coefficient

Nova Minerals  Willamette Valley

Average diversification

The 3 months correlation between Nova and Willamette is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nova Minerals Limited and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Nova Minerals 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 Nova Minerals Limited 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 Nova Minerals i.e., Nova Minerals and Willamette Valley go up and down completely randomly.

Pair Corralation between Nova Minerals and Willamette Valley

Assuming the 90 days horizon Nova Minerals Limited is expected to generate 3.06 times more return on investment than Willamette Valley. However, Nova Minerals is 3.06 times more volatile than Willamette Valley Vineyards. It trades about 0.17 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.25 per unit of risk. If you would invest  249.00  in Nova Minerals Limited on November 28, 2024 and sell it today you would earn a total of  325.00  from holding Nova Minerals Limited or generate 130.52% return on investment over 90 days.

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

Nova Minerals Limited  vs.  Willamette Valley Vineyards

Nova Minerals Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Nova Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

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 Nova Minerals and Willamette Valley

The main advantage of trading using opposite Nova Minerals and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Minerals 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 Nova Minerals Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.