Correlation Between Weis Markets and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Weis Markets and Dairy Farm 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 Weis Markets and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weis Markets and Dairy Farm International, you can compare the effects of market volatilities on Weis Markets and Dairy Farm 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 Weis Markets with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weis Markets and Dairy Farm.
Diversification Opportunities for Weis Markets and Dairy Farm
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weis and Dairy is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Weis Markets 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 Weis Markets are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Weis Markets i.e., Weis Markets and Dairy Farm go up and down completely randomly.
Pair Corralation between Weis Markets and Dairy Farm
Considering the 90-day investment horizon Weis Markets is expected to generate 0.69 times more return on investment than Dairy Farm. However, Weis Markets is 1.46 times less risky than Dairy Farm. It trades about 0.04 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.04 per unit of risk. If you would invest 6,268 in Weis Markets on August 28, 2024 and sell it today you would earn a total of 1,109 from holding Weis Markets or generate 17.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 55.65% |
| Values | Daily Returns |
Weis Markets vs. Dairy Farm International
Performance |
| Timeline |
| Weis Markets |
| Dairy Farm International |
Weis Markets and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weis Markets and Dairy Farm
The main advantage of trading using opposite Weis Markets and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weis Markets position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Weis Markets vs. Innovative Food Hldg | Weis Markets vs. Calavo Growers | Weis Markets vs. The Chefs Warehouse | Weis Markets vs. AMCON Distributing |
| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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