Correlation Between Willamette Valley and Marfrig Global

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

Diversification Opportunities for Willamette Valley and Marfrig Global

0.14

Correlation Coefficient

Willamette Valley  Marfrig Global

Average diversification

The 3 months correlation between Willamette and Marfrig is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Willamette Valley i.e., Willamette Valley and Marfrig Global go up and down completely randomly.

Pair Corralation between Willamette Valley and Marfrig Global

Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the Marfrig Global. But the preferred stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 2.85 times less risky than Marfrig Global. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  269.00  in Marfrig Global Foods on December 22, 2024 and sell it today you would earn a total of  53.00  from holding Marfrig Global Foods or generate 19.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Willamette Valley Vineyards  vs.  Marfrig Global Foods

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.

Marfrig Global Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willamette Valley and Marfrig Global

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

The idea behind Willamette Valley Vineyards and Marfrig Global Foods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.