Correlation Between Willamette Valley and Lipocine

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

Diversification Opportunities for Willamette Valley and Lipocine

-0.28

Correlation Coefficient

Willamette Valley  Lipocine

Very good diversification

The 3 months correlation between Willamette and Lipocine is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Willamette Valley i.e., Willamette Valley and Lipocine go up and down completely randomly.

Pair Corralation between Willamette Valley and Lipocine

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 0.65 times more return on investment than Lipocine. However, Willamette Valley Vineyards is 1.53 times less risky than Lipocine. It trades about 0.18 of its potential returns per unit of risk. Lipocine is currently generating about -0.05 per unit of risk. If you would invest  343.00  in Willamette Valley Vineyards on October 22, 2024 and sell it today you would earn a total of  127.00  from holding Willamette Valley Vineyards or generate 37.03% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  Lipocine

Willamette Valley

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 14 (%) 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.

Lipocine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipocine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Willamette Valley and Lipocine

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

The idea behind Willamette Valley Vineyards and Lipocine 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 Commodity Directory module to find actively traded commodities issued by global exchanges.