Correlation Between Willamette Valley and NETGEAR

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

Diversification Opportunities for Willamette Valley and NETGEAR

0.05

Correlation Coefficient

Willamette Valley  NETGEAR

Significant diversification

The 3 months correlation between Willamette and NETGEAR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Willamette Valley i.e., Willamette Valley and NETGEAR go up and down completely randomly.

Pair Corralation between Willamette Valley and NETGEAR

Assuming the 90 days horizon Willamette Valley is expected to generate 6.57 times less return on investment than NETGEAR. In addition to that, Willamette Valley is 1.1 times more volatile than NETGEAR. It trades about 0.04 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.28 per unit of volatility. If you would invest  2,022  in NETGEAR on October 25, 2024 and sell it today you would earn a total of  843.00  from holding NETGEAR or generate 41.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Willamette Valley Vineyards  vs.  NETGEAR

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.

NETGEAR

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willamette Valley and NETGEAR

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

The idea behind Willamette Valley Vineyards and NETGEAR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.