Correlation Between Weyco and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Weyco and Freedom Holding 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 Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Freedom Holding Corp, you can compare the effects of market volatilities on Weyco and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Freedom Holding.
Diversification Opportunities for Weyco and Freedom Holding
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weyco and Freedom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Weyco i.e., Weyco and Freedom Holding go up and down completely randomly.
Pair Corralation between Weyco and Freedom Holding
Given the investment horizon of 90 days Weyco is expected to generate 1.36 times less return on investment than Freedom Holding. In addition to that, Weyco is 2.13 times more volatile than Freedom Holding Corp. It trades about 0.08 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.22 per unit of volatility. If you would invest 10,577 in Freedom Holding Corp on August 24, 2024 and sell it today you would earn a total of 1,170 from holding Freedom Holding Corp or generate 11.06% 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. Freedom Holding Corp
Performance |
| Timeline |
| Weyco Group |
| Freedom Holding Corp |
Weyco and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Freedom Holding
The main advantage of trading using opposite Weyco and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.The idea behind Weyco Group and Freedom Holding Corp 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.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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