Correlation Between BOS Better and Willamette Valley

Can any of the company-specific risk be diversified away by investing in both BOS Better 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 BOS Better and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOS Better Online and Willamette Valley Vineyards, you can compare the effects of market volatilities on BOS Better 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 BOS Better with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Willamette Valley.

Diversification Opportunities for BOS Better and Willamette Valley

-0.18

Correlation Coefficient

BOS Better  Willamette Valley

Good diversification

The 3 months correlation between BOS and Willamette is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and BOS Better 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 BOS Better Online 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 BOS Better i.e., BOS Better and Willamette Valley go up and down completely randomly.

Pair Corralation between BOS Better and Willamette Valley

Given the investment horizon of 90 days BOS Better Online is expected to generate 0.28 times more return on investment than Willamette Valley. However, BOS Better Online is 3.6 times less risky than Willamette Valley. It trades about -0.01 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.19 per unit of risk. If you would invest  277.00  in BOS Better Online on February 21, 2024 and sell it today you would lose (1.00) from holding BOS Better Online or give up 0.36% of portfolio value over 90 days.

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

BOS Better Online  vs.  Willamette Valley Vineyards

BOS Better Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOS Better Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BOS Better is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with BOS Better and Willamette Valley

The main advantage of trading using opposite BOS Better and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better 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.

The idea behind BOS Better Online and Willamette Valley 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.