Correlation Between Willamette Valley and Kite Realty

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

Diversification Opportunities for Willamette Valley and Kite Realty

-0.62

Correlation Coefficient

Willamette Valley  Kite Realty

Excellent diversification

The 3 months correlation between Willamette and Kite is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Willamette Valley i.e., Willamette Valley and Kite Realty go up and down completely randomly.

Pair Corralation between Willamette Valley and Kite Realty

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 3.44 times more return on investment than Kite Realty. However, Willamette Valley is 3.44 times more volatile than Kite Realty Group. It trades about 0.39 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.09 per unit of risk. If you would invest  330.00  in Willamette Valley Vineyards on October 20, 2024 and sell it today you would earn a total of  140.00  from holding Willamette Valley Vineyards or generate 42.42% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  Kite Realty Group

Willamette Valley

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 13 (%) 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.

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Willamette Valley and Kite Realty

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

The idea behind Willamette Valley Vineyards and Kite Realty Group 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.