Correlation Between Willamette Valley and Chemours

Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Chemours 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 Chemours 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 Chemours Co, you can compare the effects of market volatilities on Willamette Valley and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Chemours.

Diversification Opportunities for Willamette Valley and Chemours

-0.18

Correlation Coefficient

Willamette Valley  Chemours

Good diversification

The 3 months correlation between Willamette and Chemours is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Willamette Valley i.e., Willamette Valley and Chemours go up and down completely randomly.

Pair Corralation between Willamette Valley and Chemours

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 1.68 times less risky than Chemours. The stock trades about -0.08 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,248  in Chemours Co on September 25, 2024 and sell it today you would lose (494.00) from holding Chemours Co or give up 21.98% of portfolio value over 90 days.

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

Willamette Valley Vineyards  vs.  Chemours Co

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. 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.

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Willamette Valley and Chemours

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

The idea behind Willamette Valley Vineyards and Chemours Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.