Correlation Between Willamette Valley and EAST Old

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

Diversification Opportunities for Willamette Valley and EAST Old

0.0

Correlation Coefficient

Willamette Valley  EAST Old

Pay attention - limited upside

The 3 months correlation between Willamette and EAST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and EAST Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST Old 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 EAST Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST Old has no effect on the direction of Willamette Valley i.e., Willamette Valley and EAST Old go up and down completely randomly.

Pair Corralation between Willamette Valley and EAST Old

If you would invest  340.00  in Willamette Valley Vineyards on December 30, 2024 and sell it today you would earn a total of  265.00  from holding Willamette Valley Vineyards or generate 77.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Willamette Valley Vineyards  vs.  EAST Old

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 19 (%) 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.

EAST Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EAST Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Willamette Valley and EAST Old

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

The idea behind Willamette Valley Vineyards and EAST Old 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.