Correlation Between Weyco and European Wax
Can any of the company-specific risk be diversified away by investing in both Weyco and European Wax 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 European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and European Wax Center, you can compare the effects of market volatilities on Weyco and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and European Wax.
Diversification Opportunities for Weyco and European Wax
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weyco and European is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Weyco i.e., Weyco and European Wax go up and down completely randomly.
Pair Corralation between Weyco and European Wax
Given the investment horizon of 90 days Weyco Group is expected to generate 0.58 times more return on investment than European Wax. However, Weyco Group is 1.72 times less risky than European Wax. It trades about 0.06 of its potential returns per unit of risk. European Wax Center is currently generating about -0.07 per unit of risk. If you would invest 2,565 in Weyco Group on August 29, 2024 and sell it today you would earn a total of 998.00 from holding Weyco Group or generate 38.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. European Wax Center
Performance |
| Timeline |
| Weyco Group |
| European Wax Center |
Weyco and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and European Wax
The main advantage of trading using opposite Weyco and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.The idea behind Weyco Group and European Wax Center 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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