Correlation Between Weibo Corp and Willamette Valley

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

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

Diversification Opportunities for Weibo Corp and Willamette Valley

0.47

Correlation Coefficient

Weibo Corp  Willamette Valley

Very weak diversification

The 3 months correlation between Weibo and Willamette is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Weibo Corp 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 Weibo Corp 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 Weibo Corp i.e., Weibo Corp and Willamette Valley go up and down completely randomly.

Pair Corralation between Weibo Corp and Willamette Valley

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Willamette Valley. But the stock apears to be less risky and, when comparing its historical volatility, Weibo Corp is 1.15 times less risky than Willamette Valley. The stock trades about -0.32 of its potential returns per unit of risk. The Willamette Valley Vineyards is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Willamette Valley Vineyards on October 10, 2024 and sell it today you would lose (6.00) from holding Willamette Valley Vineyards or give up 1.71% of portfolio value over 90 days.

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

Weibo Corp  vs.  Willamette Valley Vineyards

Weibo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Willamette Valley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Weibo Corp and Willamette Valley

The main advantage of trading using opposite Weibo Corp and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp 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 Weibo Corp 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.