Correlation Between Willamette Valley and BRC

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

Diversification Opportunities for Willamette Valley and BRC

0.51

Correlation Coefficient

Willamette Valley  BRC

Very weak diversification

The 3 months correlation between Willamette and BRC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc 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 BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Willamette Valley i.e., Willamette Valley and BRC go up and down completely randomly.

Pair Corralation between Willamette Valley and BRC

Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 0.63 times more return on investment than BRC. However, Willamette Valley Vineyards is 1.59 times less risky than BRC. It trades about -0.01 of its potential returns per unit of risk. BRC Inc is currently generating about -0.12 per unit of risk. If you would invest  344.00  in Willamette Valley Vineyards on December 22, 2024 and sell it today you would lose (8.00) from holding Willamette Valley Vineyards or give up 2.33% of portfolio value over 90 days.

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

Willamette Valley Vineyards  vs.  BRC Inc

Willamette Valley

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Willamette Valley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

BRC Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Willamette Valley and BRC

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

The idea behind Willamette Valley Vineyards and BRC Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.