Correlation Between Willamette Valley and AMERICAN

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

Diversification Opportunities for Willamette Valley and AMERICAN

-0.16

Correlation Coefficient

Willamette Valley  AMERICAN

Good diversification

The 3 months correlation between Willamette and AMERICAN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and AMERICAN INTL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN INTL GROUP 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN INTL GROUP has no effect on the direction of Willamette Valley i.e., Willamette Valley and AMERICAN go up and down completely randomly.

Pair Corralation between Willamette Valley and AMERICAN

Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the AMERICAN. But the preferred stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 37.48 times less risky than AMERICAN. The preferred stock trades about -0.01 of its potential returns per unit of risk. The AMERICAN INTL GROUP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,139  in AMERICAN INTL GROUP on October 10, 2024 and sell it today you would lose (623.00) from holding AMERICAN INTL GROUP or give up 5.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.23%
Values	Daily Returns

Willamette Valley Vineyards  vs.  AMERICAN INTL GROUP

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.

AMERICAN INTL GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Willamette Valley and AMERICAN

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

The idea behind Willamette Valley Vineyards and AMERICAN INTL GROUP 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.