Correlation Between Willamette Valley and Noble Plc

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

Diversification Opportunities for Willamette Valley and Noble Plc

0.24

Correlation Coefficient

Willamette Valley  Noble Plc

Modest diversification

The 3 months correlation between Willamette and Noble is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Willamette Valley i.e., Willamette Valley and Noble Plc go up and down completely randomly.

Pair Corralation between Willamette Valley and Noble Plc

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Noble Plc. In addition to that, Willamette Valley is 1.04 times more volatile than Noble plc. It trades about -0.07 of its total potential returns per unit of risk. Noble plc is currently generating about -0.04 per unit of volatility. If you would invest  4,378  in Noble plc on October 5, 2024 and sell it today you would lose (1,082) from holding Noble plc or give up 24.71% of portfolio value over 90 days.

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

Willamette Valley Vineyards  vs.  Noble plc

Willamette Valley

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Willamette Valley and Noble Plc

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

The idea behind Willamette Valley Vineyards and Noble plc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.