Correlation Between Willamette Valley and Joint Stock

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

Diversification Opportunities for Willamette Valley and Joint Stock

-0.21

Correlation Coefficient

Willamette Valley  Joint Stock

Very good diversification

The 3 months correlation between Willamette and Joint is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Willamette Valley i.e., Willamette Valley and Joint Stock go up and down completely randomly.

Pair Corralation between Willamette Valley and Joint Stock

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Joint Stock. But the stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 1.06 times less risky than Joint Stock. The stock trades about -0.03 of its potential returns per unit of risk. The Joint Stock is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,886  in Joint Stock on October 14, 2024 and sell it today you would lose (1,723) from holding Joint Stock or give up 15.83% 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.  Joint Stock

Willamette Valley

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 3 (%) 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.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock 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 fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Willamette Valley and Joint Stock

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

The idea behind Willamette Valley Vineyards and Joint Stock 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.