Correlation Between Willamette Valley and X FAB

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

Diversification Opportunities for Willamette Valley and X FAB

0.6

Correlation Coefficient

Willamette Valley  X FAB

Poor diversification

The 3 months correlation between Willamette and XFABF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Willamette Valley i.e., Willamette Valley and X FAB go up and down completely randomly.

Pair Corralation between Willamette Valley and X FAB

Given the investment horizon of 90 days Willamette Valley is expected to generate 13.99 times less return on investment than X FAB. But when comparing it to its historical volatility, Willamette Valley Vineyards is 1.81 times less risky than X FAB. It trades about 0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  471.00  in X FAB Silicon Foundries on October 7, 2024 and sell it today you would earn a total of  21.00  from holding X FAB Silicon Foundries or generate 4.46% return on investment over 90 days.

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

Willamette Valley Vineyards  vs.  X FAB Silicon Foundries

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.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Willamette Valley and X FAB

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

The idea behind Willamette Valley Vineyards and X FAB Silicon Foundries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.