Correlation Between Willamette Valley and Babcock Wilcox

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

Diversification Opportunities for Willamette Valley and Babcock Wilcox

-0.08

Correlation Coefficient

Willamette Valley  Babcock Wilcox

Good diversification

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

Pair Corralation between Willamette Valley and Babcock Wilcox

Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 0.97 times more return on investment than Babcock Wilcox. However, Willamette Valley Vineyards is 1.03 times less risky than Babcock Wilcox. It trades about 0.12 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.0 per unit of risk. If you would invest  335.00  in Willamette Valley Vineyards on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Willamette Valley Vineyards or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Willamette Valley Vineyards  vs.  Babcock Wilcox Enterprises

Willamette Valley

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Babcock Wilcox Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Willamette Valley and Babcock Wilcox

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

The idea behind Willamette Valley Vineyards and Babcock Wilcox Enterprises 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.