Correlation Between Willamette Valley and WORK Medical

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

Diversification Opportunities for Willamette Valley and WORK Medical

0.08

Correlation Coefficient

Willamette Valley  WORK Medical

Significant diversification

The 3 months correlation between Willamette and WORK is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and WORK Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WORK Medical Technology 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 WORK Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WORK Medical Technology has no effect on the direction of Willamette Valley i.e., Willamette Valley and WORK Medical go up and down completely randomly.

Pair Corralation between Willamette Valley and WORK Medical

Given the investment horizon of 90 days Willamette Valley Vineyards is expected to generate 0.18 times more return on investment than WORK Medical. However, Willamette Valley Vineyards is 5.48 times less risky than WORK Medical. It trades about 0.13 of its potential returns per unit of risk. WORK Medical Technology is currently generating about -0.16 per unit of risk. If you would invest  324.00  in Willamette Valley Vineyards on October 7, 2024 and sell it today you would earn a total of  13.00  from holding Willamette Valley Vineyards or generate 4.01% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  WORK Medical Technology

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.

WORK Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WORK Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Willamette Valley and WORK Medical

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

The idea behind Willamette Valley Vineyards and WORK Medical Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.