Correlation Between Weyco and NI Holdings
Can any of the company-specific risk be diversified away by investing in both Weyco and NI Holdings 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 NI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and NI Holdings, you can compare the effects of market volatilities on Weyco and NI Holdings 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 NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and NI Holdings.
Diversification Opportunities for Weyco and NI Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weyco and NODK is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Weyco i.e., Weyco and NI Holdings go up and down completely randomly.
Pair Corralation between Weyco and NI Holdings
Given the investment horizon of 90 days Weyco Group is expected to generate 4.62 times more return on investment than NI Holdings. However, Weyco is 4.62 times more volatile than NI Holdings. It trades about 0.07 of its potential returns per unit of risk. NI Holdings is currently generating about 0.25 per unit of risk. If you would invest 3,435 in Weyco Group on August 24, 2024 and sell it today you would earn a total of 168.00 from holding Weyco Group or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. NI Holdings
Performance |
| Timeline |
| Weyco Group |
| NI Holdings |
Weyco and NI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and NI Holdings
The main advantage of trading using opposite Weyco and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, NI Holdings 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 NI Holdings will offset losses from the drop in NI Holdings' long position.The idea behind Weyco Group and NI Holdings 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.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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