Correlation Between Willamette Valley and CROWN

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

Diversification Opportunities for Willamette Valley and CROWN

-0.23

Correlation Coefficient

Willamette Valley  CROWN

Very good diversification

The 3 months correlation between Willamette and CROWN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and CROWN CASTLE INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTL 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTL has no effect on the direction of Willamette Valley i.e., Willamette Valley and CROWN go up and down completely randomly.

Pair Corralation between Willamette Valley and CROWN

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 3.52 times more return on investment than CROWN. However, Willamette Valley is 3.52 times more volatile than CROWN CASTLE INTL. It trades about -0.01 of its potential returns per unit of risk. CROWN CASTLE INTL is currently generating about -0.15 per unit of risk. If you would invest  341.00  in Willamette Valley Vineyards on October 6, 2024 and sell it today you would lose (4.00) from holding Willamette Valley Vineyards or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Willamette Valley Vineyards  vs.  CROWN CASTLE INTL

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 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.

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willamette Valley and CROWN

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

The idea behind Willamette Valley Vineyards and CROWN CASTLE INTL 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.