Correlation Between Weyerhaeuser and Global Net
Can any of the company-specific risk be diversified away by investing in both Weyerhaeuser and Global Net 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 Weyerhaeuser and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyerhaeuser and Global Net Lease, you can compare the effects of market volatilities on Weyerhaeuser and Global Net 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 Weyerhaeuser with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyerhaeuser and Global Net.
Diversification Opportunities for Weyerhaeuser and Global Net
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weyerhaeuser and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Weyerhaeuser 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 Weyerhaeuser are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Weyerhaeuser i.e., Weyerhaeuser and Global Net go up and down completely randomly.
Pair Corralation between Weyerhaeuser and Global Net
Allowing for the 90-day total investment horizon Weyerhaeuser is expected to generate 0.98 times more return on investment than Global Net. However, Weyerhaeuser is 1.02 times less risky than Global Net. It trades about 0.24 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.02 per unit of risk. If you would invest 2,850 in Weyerhaeuser on November 6, 2024 and sell it today you would earn a total of 225.00 from holding Weyerhaeuser or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyerhaeuser vs. Global Net Lease
Performance |
| Timeline |
| Weyerhaeuser |
| Global Net Lease |
Weyerhaeuser and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyerhaeuser and Global Net
The main advantage of trading using opposite Weyerhaeuser and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Weyerhaeuser vs. Rayonier | Weyerhaeuser vs. Lamar Advertising | Weyerhaeuser vs. Farmland Partners | Weyerhaeuser vs. Gladstone Land |
| Global Net vs. Modiv Inc | Global Net vs. Precinct Properties New | Global Net vs. Global Net Lease | Global Net vs. NexPoint Diversified Real |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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