Correlation Between Willamette Valley and Life Time

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

Diversification Opportunities for Willamette Valley and Life Time

0.5

Correlation Coefficient

Willamette Valley  Life Time

Very weak diversification

The 3 months correlation between Willamette and Life is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Willamette Valley i.e., Willamette Valley and Life Time go up and down completely randomly.

Pair Corralation between Willamette Valley and Life Time

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 0.79 times more return on investment than Life Time. However, Willamette Valley Vineyards is 1.26 times less risky than Life Time. It trades about 0.05 of its potential returns per unit of risk. Life Time Group is currently generating about -0.19 per unit of risk. If you would invest  326.00  in Willamette Valley Vineyards on September 21, 2024 and sell it today you would earn a total of  4.00  from holding Willamette Valley Vineyards or generate 1.23% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  Life Time Group

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Willamette Valley and Life Time

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

The idea behind Willamette Valley Vineyards and Life Time 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.