Correlation Between Weyco and Groupon
Can any of the company-specific risk be diversified away by investing in both Weyco and Groupon 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 Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Groupon, you can compare the effects of market volatilities on Weyco and Groupon 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 Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Groupon.
Diversification Opportunities for Weyco and Groupon
Good diversification
The 3 months correlation between Weyco and Groupon is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon 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 Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Weyco i.e., Weyco and Groupon go up and down completely randomly.
Pair Corralation between Weyco and Groupon
Given the investment horizon of 90 days Weyco is expected to generate 4.21 times less return on investment than Groupon. But when comparing it to its historical volatility, Weyco Group is 2.74 times less risky than Groupon. It trades about 0.03 of its potential returns per unit of risk. Groupon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,201 in Groupon on December 18, 2024 and sell it today you would earn a total of 397.00 from holding Groupon or generate 33.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Groupon
Performance |
| Timeline |
| Weyco Group |
| Groupon |
Weyco and Groupon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Groupon
The main advantage of trading using opposite Weyco and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.The idea behind Weyco Group and Groupon 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |