Correlation Between United States and Weyco
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Lime and Weyco Group, you can compare the effects of market volatilities on United States 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 United States with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Weyco.
Diversification Opportunities for United States and Weyco
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Weyco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding United States Lime and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and United States 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 United States Lime 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 United States i.e., United States and Weyco go up and down completely randomly.
Pair Corralation between United States and Weyco
Given the investment horizon of 90 days United States Lime is expected to generate 0.86 times more return on investment than Weyco. However, United States Lime is 1.16 times less risky than Weyco. It trades about 0.43 of its potential returns per unit of risk. Weyco Group is currently generating about 0.08 per unit of risk. If you would invest 10,301 in United States Lime on August 23, 2024 and sell it today you would earn a total of 4,732 from holding United States Lime or generate 45.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Lime vs. Weyco Group
Performance |
| Timeline |
| United States Lime |
| Weyco Group |
United States and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Weyco
The main advantage of trading using opposite United States and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Smith Midland Corp | United States vs. Holcim | United States vs. Lafargeholcim Ltd ADR | United States vs. Cementos Pacasmayo SAA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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