Correlation Between Adidas AG and Weyco
Can any of the company-specific risk be diversified away by investing in both Adidas AG and Weyco 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 Adidas AG and Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG ADR and Weyco Group, you can compare the effects of market volatilities on Adidas AG and Weyco 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 Adidas AG with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and Weyco.
Diversification Opportunities for Adidas AG and Weyco
Excellent diversification
The 3 months correlation between Adidas and Weyco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG ADR and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Adidas AG 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 Adidas AG ADR are associated (or correlated) with Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Adidas AG i.e., Adidas AG and Weyco go up and down completely randomly.
Pair Corralation between Adidas AG and Weyco
Assuming the 90 days horizon Adidas AG ADR is expected to under-perform the Weyco. But the otc stock apears to be less risky and, when comparing its historical volatility, Adidas AG ADR is 2.36 times less risky than Weyco. The otc stock trades about -0.06 of its potential returns per unit of risk. The Weyco Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,382 in Weyco Group on August 31, 2024 and sell it today you would earn a total of 181.00 from holding Weyco Group or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adidas AG ADR vs. Weyco Group
Performance |
| Timeline |
| Adidas AG ADR |
| Weyco Group |
Adidas AG and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adidas AG and Weyco
The main advantage of trading using opposite Adidas AG and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco's long position.| Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Crocs Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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