Correlation Between Willamette Valley and Broadstone Net

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

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

Diversification Opportunities for Willamette Valley and Broadstone Net

0.63

Correlation Coefficient

Willamette Valley  Broadstone Net

Poor diversification

The 3 months correlation between Willamette and Broadstone is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and Willamette Valley 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 Willamette Valley Vineyards are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of Willamette Valley i.e., Willamette Valley and Broadstone Net go up and down completely randomly.

Pair Corralation between Willamette Valley and Broadstone Net

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 1.45 times more return on investment than Broadstone Net. However, Willamette Valley is 1.45 times more volatile than Broadstone Net Lease. It trades about 0.16 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.38 per unit of risk. If you would invest  331.00  in Willamette Valley Vineyards on October 1, 2024 and sell it today you would earn a total of  16.00  from holding Willamette Valley Vineyards or generate 4.83% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  Broadstone Net Lease

Willamette Valley

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Willamette Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Willamette Valley and Broadstone Net

The main advantage of trading using opposite Willamette Valley and Broadstone Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Broadstone Net 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 Broadstone Net will offset losses from the drop in Broadstone Net's long position.

The idea behind Willamette Valley Vineyards and Broadstone Net Lease 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.