Correlation Between Western Asset and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Western Asset and Willamette Valley 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 Western Asset and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Willamette Valley Vineyards, you can compare the effects of market volatilities on Western Asset and Willamette Valley 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 Western Asset with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Willamette Valley.
Diversification Opportunities for Western Asset and Willamette Valley
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Willamette is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and Western Asset 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 Western Asset Investment are associated (or correlated) with Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Western Asset i.e., Western Asset and Willamette Valley go up and down completely randomly.
Pair Corralation between Western Asset and Willamette Valley
Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.25 times more return on investment than Willamette Valley. However, Western Asset Investment is 4.01 times less risky than Willamette Valley. It trades about -0.03 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.08 per unit of risk. If you would invest 1,670 in Western Asset Investment on September 25, 2024 and sell it today you would lose (37.00) from holding Western Asset Investment or give up 2.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Investment vs. Willamette Valley Vineyards
Performance |
Timeline |
Western Asset Investment |
Willamette Valley |
Western Asset and Willamette Valley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Willamette Valley
The main advantage of trading using opposite Western Asset and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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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 the CEOs Directory module to screen CEOs from public companies around the world.
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