Correlation Between Southwest Gas and Weyco
Can any of the company-specific risk be diversified away by investing in both Southwest Gas 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 Southwest Gas and Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and Weyco Group, you can compare the effects of market volatilities on Southwest Gas 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 Southwest Gas with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and Weyco.
Diversification Opportunities for Southwest Gas and Weyco
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and Weyco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Southwest Gas 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 Southwest Gas Holdings 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 Southwest Gas i.e., Southwest Gas and Weyco go up and down completely randomly.
Pair Corralation between Southwest Gas and Weyco
Considering the 90-day investment horizon Southwest Gas is expected to generate 2.01 times less return on investment than Weyco. But when comparing it to its historical volatility, Southwest Gas Holdings is 1.41 times less risky than Weyco. It trades about 0.03 of its potential returns per unit of risk. Weyco Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,497 in Weyco Group on August 29, 2024 and sell it today you would earn a total of 1,121 from holding Weyco Group or generate 44.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Gas Holdings vs. Weyco Group
Performance |
| Timeline |
| Southwest Gas Holdings |
| Weyco Group |
Southwest Gas and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and Weyco
The main advantage of trading using opposite Southwest Gas and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas 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.| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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