Correlation Between Willamette Valley and Catalent
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Catalent 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 Catalent 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 Catalent, you can compare the effects of market volatilities on Willamette Valley and Catalent 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 Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Catalent.
Diversification Opportunities for Willamette Valley and Catalent
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willamette and Catalent is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Willamette Valley i.e., Willamette Valley and Catalent go up and down completely randomly.
Pair Corralation between Willamette Valley and Catalent
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Catalent. But the stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 1.62 times less risky than Catalent. The stock trades about -0.05 of its potential returns per unit of risk. The Catalent is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,545 in Catalent on September 23, 2024 and sell it today you would earn a total of 1,803 from holding Catalent or generate 39.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.4% |
Values | Daily Returns |
Willamette Valley Vineyards vs. Catalent
Performance |
Timeline |
Willamette Valley |
Catalent |
Willamette Valley and Catalent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Willamette Valley and Catalent
The main advantage of trading using opposite Willamette Valley and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.Willamette Valley vs. Brown Forman | Willamette Valley vs. MGP Ingredients | Willamette Valley vs. Duckhorn Portfolio | Willamette Valley vs. Brown Forman |
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Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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