Correlation Between Willamette Valley and Sellas Life

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

Diversification Opportunities for Willamette Valley and Sellas Life

0.11

Correlation Coefficient

Willamette Valley  Sellas Life

Average diversification

The 3 months correlation between Willamette and Sellas is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences 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 Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of Willamette Valley i.e., Willamette Valley and Sellas Life go up and down completely randomly.

Pair Corralation between Willamette Valley and Sellas Life

Assuming the 90 days horizon Willamette Valley Vineyards is expected to generate 0.45 times more return on investment than Sellas Life. However, Willamette Valley Vineyards is 2.22 times less risky than Sellas Life. It trades about -0.03 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.01 per unit of risk. If you would invest  350.00  in Willamette Valley Vineyards on October 10, 2024 and sell it today you would lose (6.00) from holding Willamette Valley Vineyards or give up 1.71% of portfolio value over 90 days.

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

Willamette Valley Vineyards  vs.  Sellas Life Sciences

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. 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.

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Willamette Valley and Sellas Life

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

The idea behind Willamette Valley Vineyards and Sellas Life Sciences 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.