Correlation Between Splash Beverage and Willamette Valley

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

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

Diversification Opportunities for Splash Beverage and Willamette Valley

0.06

Correlation Coefficient

Splash Beverage  Willamette Valley

Significant diversification

The 3 months correlation between Splash and Willamette is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Splash Beverage Group and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Splash Beverage 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 Splash Beverage Group 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 Splash Beverage i.e., Splash Beverage and Willamette Valley go up and down completely randomly.

Pair Corralation between Splash Beverage and Willamette Valley

Given the investment horizon of 90 days Splash Beverage is expected to generate 14.08 times less return on investment than Willamette Valley. In addition to that, Splash Beverage is 2.13 times more volatile than Willamette Valley Vineyards. It trades about 0.01 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.27 per unit of volatility. If you would invest  331.00  in Willamette Valley Vineyards on December 2, 2024 and sell it today you would earn a total of  281.00  from holding Willamette Valley Vineyards or generate 84.89% return on investment over 90 days.

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

Splash Beverage Group  vs.  Willamette Valley Vineyards

Splash Beverage Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Splash Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Splash Beverage is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 21 (%) 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 Splash Beverage and Willamette Valley

The main advantage of trading using opposite Splash Beverage and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Splash Beverage 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 Splash Beverage Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.