Correlation Between Weyco and Crocs
Can any of the company-specific risk be diversified away by investing in both Weyco and Crocs 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 Weyco and Crocs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Crocs Inc, you can compare the effects of market volatilities on Weyco and Crocs 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 Weyco with a short position of Crocs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Crocs.
Diversification Opportunities for Weyco and Crocs
Excellent diversification
The 3 months correlation between Weyco and Crocs is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Crocs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crocs Inc and Weyco 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 Weyco Group are associated (or correlated) with Crocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crocs Inc has no effect on the direction of Weyco i.e., Weyco and Crocs go up and down completely randomly.
Pair Corralation between Weyco and Crocs
Given the investment horizon of 90 days Weyco Group is expected to generate 1.07 times more return on investment than Crocs. However, Weyco is 1.07 times more volatile than Crocs Inc. It trades about 0.07 of its potential returns per unit of risk. Crocs Inc is currently generating about -0.23 per unit of risk. If you would invest 3,435 in Weyco Group on August 24, 2024 and sell it today you would earn a total of 168.00 from holding Weyco Group or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Crocs Inc
Performance |
| Timeline |
| Weyco Group |
| Crocs Inc |
Weyco and Crocs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Crocs
The main advantage of trading using opposite Weyco and Crocs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Crocs 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 Crocs will offset losses from the drop in Crocs' long position.The idea behind Weyco Group and Crocs Inc 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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