Correlation Between Weyco and Sonos
Can any of the company-specific risk be diversified away by investing in both Weyco and Sonos 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 Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Sonos Inc, you can compare the effects of market volatilities on Weyco and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Sonos.
Diversification Opportunities for Weyco and Sonos
Poor diversification
The 3 months correlation between Weyco and Sonos is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Weyco i.e., Weyco and Sonos go up and down completely randomly.
Pair Corralation between Weyco and Sonos
Given the investment horizon of 90 days Weyco Group is expected to generate 0.79 times more return on investment than Sonos. However, Weyco Group is 1.27 times less risky than Sonos. It trades about 0.05 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.01 per unit of risk. If you would invest 2,422 in Weyco Group on September 3, 2024 and sell it today you would earn a total of 1,149 from holding Weyco Group or generate 47.44% 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. Sonos Inc
Performance |
| Timeline |
| Weyco Group |
| Sonos Inc |
Weyco and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Sonos
The main advantage of trading using opposite Weyco and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.The idea behind Weyco Group and Sonos Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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