Correlation Between Willamette Valley and INGERSOLL

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

Diversification Opportunities for Willamette Valley and INGERSOLL

-0.25

Correlation Coefficient

Willamette Valley  INGERSOLL

Very good diversification

The 3 months correlation between Willamette and INGERSOLL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and INGERSOLL RAND LUXEMBOURG FINA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND LUXEM 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND LUXEM has no effect on the direction of Willamette Valley i.e., Willamette Valley and INGERSOLL go up and down completely randomly.

Pair Corralation between Willamette Valley and INGERSOLL

Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the INGERSOLL. In addition to that, Willamette Valley is 8.57 times more volatile than INGERSOLL RAND LUXEMBOURG FINANCE. It trades about -0.02 of its total potential returns per unit of risk. INGERSOLL RAND LUXEMBOURG FINANCE is currently generating about -0.02 per unit of volatility. If you would invest  9,659  in INGERSOLL RAND LUXEMBOURG FINANCE on October 9, 2024 and sell it today you would lose (174.00) from holding INGERSOLL RAND LUXEMBOURG FINANCE or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.36%
Values	Daily Returns

Willamette Valley Vineyards  vs.  INGERSOLL RAND LUXEMBOURG FINA

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.

INGERSOLL RAND LUXEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND LUXEMBOURG FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willamette Valley and INGERSOLL

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

The idea behind Willamette Valley Vineyards and INGERSOLL RAND LUXEMBOURG FINANCE 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.