Correlation Between Willamette Valley and Scheid Vineyards

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Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Scheid Vineyards 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 Scheid Vineyards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willamette Valley and Scheid Vineyards, you can compare the effects of market volatilities on Willamette Valley and Scheid Vineyards 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 Scheid Vineyards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Scheid Vineyards.

Diversification Opportunities for Willamette Valley and Scheid Vineyards

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Willamette and Scheid is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley and Scheid Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scheid Vineyards 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 are associated (or correlated) with Scheid Vineyards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scheid Vineyards has no effect on the direction of Willamette Valley i.e., Willamette Valley and Scheid Vineyards go up and down completely randomly.

Pair Corralation between Willamette Valley and Scheid Vineyards

Given the investment horizon of 90 days Willamette Valley is expected to generate 4.03 times less return on investment than Scheid Vineyards. In addition to that, Willamette Valley is 1.0 times more volatile than Scheid Vineyards. It trades about 0.01 of its total potential returns per unit of risk. Scheid Vineyards is currently generating about 0.02 per unit of volatility. If you would invest  1,500  in Scheid Vineyards on August 31, 2022 and sell it today you would earn a total of  245.00  from holding Scheid Vineyards or generate 16.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Willamette Valley  vs.  Scheid Vineyards

 Performance (%) 
       Timeline  
Willamette Valley 
Willamette Performance
0 of 100
Over the last 90 days Willamette Valley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Willamette Valley is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Willamette Price Channel

Scheid Vineyards 
Scheid Performance
0 of 100
Over the last 90 days Scheid Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Scheid Price Channel

Willamette Valley and Scheid Vineyards Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Willamette Valley and Scheid Vineyards

The main advantage of trading using opposite Willamette Valley and Scheid Vineyards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Scheid Vineyards 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 Scheid Vineyards will offset losses from the drop in Scheid Vineyards' long position.
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The idea behind Willamette Valley and Scheid Vineyards 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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Check out your portfolio center. 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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