Correlation Between Weyco and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Weyco and Natural Alternatives 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 Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Natural Alternatives International, you can compare the effects of market volatilities on Weyco and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Natural Alternatives.
Diversification Opportunities for Weyco and Natural Alternatives
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weyco and Natural is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Weyco i.e., Weyco and Natural Alternatives go up and down completely randomly.
Pair Corralation between Weyco and Natural Alternatives
Given the investment horizon of 90 days Weyco Group is expected to generate 2.13 times more return on investment than Natural Alternatives. However, Weyco is 2.13 times more volatile than Natural Alternatives International. It trades about 0.12 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.09 per unit of risk. If you would invest 3,368 in Weyco Group on August 28, 2024 and sell it today you would earn a total of 363.00 from holding Weyco Group or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Natural Alternatives Internati
Performance |
| Timeline |
| Weyco Group |
| Natural Alternatives |
Weyco and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Natural Alternatives
The main advantage of trading using opposite Weyco and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.The idea behind Weyco Group and Natural Alternatives International 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.| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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