Correlation Between Weyco and Custom Truck
Can any of the company-specific risk be diversified away by investing in both Weyco and Custom Truck 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 Custom Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Custom Truck One, you can compare the effects of market volatilities on Weyco and Custom Truck 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 Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Custom Truck.
Diversification Opportunities for Weyco and Custom Truck
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weyco and Custom is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One 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 Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Weyco i.e., Weyco and Custom Truck go up and down completely randomly.
Pair Corralation between Weyco and Custom Truck
Given the investment horizon of 90 days Weyco is expected to generate 3.1 times less return on investment than Custom Truck. But when comparing it to its historical volatility, Weyco Group is 1.25 times less risky than Custom Truck. It trades about 0.06 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 425.00 in Custom Truck One on August 29, 2024 and sell it today you would earn a total of 155.00 from holding Custom Truck One or generate 36.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Custom Truck One
Performance |
| Timeline |
| Weyco Group |
| Custom Truck One |
Weyco and Custom Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Custom Truck
The main advantage of trading using opposite Weyco and Custom Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Custom Truck 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 Custom Truck will offset losses from the drop in Custom Truck's long position.The idea behind Weyco Group and Custom Truck One 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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