Correlation Between Weyerhaeuser and MDJM
Can any of the company-specific risk be diversified away by investing in both Weyerhaeuser and MDJM 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 MDJM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyerhaeuser and MDJM, you can compare the effects of market volatilities on Weyerhaeuser and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyerhaeuser and MDJM.
Diversification Opportunities for Weyerhaeuser and MDJM
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weyerhaeuser and MDJM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Weyerhaeuser i.e., Weyerhaeuser and MDJM go up and down completely randomly.
Pair Corralation between Weyerhaeuser and MDJM
Allowing for the 90-day total investment horizon Weyerhaeuser is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Weyerhaeuser is 6.92 times less risky than MDJM. The stock trades about -0.28 of its potential returns per unit of risk. The MDJM is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 22.00 in MDJM on October 15, 2024 and sell it today you would lose (3.00) from holding MDJM or give up 13.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyerhaeuser vs. MDJM
Performance |
| Timeline |
| Weyerhaeuser |
| MDJM |
Weyerhaeuser and MDJM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyerhaeuser and MDJM
The main advantage of trading using opposite Weyerhaeuser and MDJM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser position performs unexpectedly, MDJM 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 MDJM will offset losses from the drop in MDJM's long position.| Weyerhaeuser vs. Rayonier | Weyerhaeuser vs. Lamar Advertising | Weyerhaeuser vs. Farmland Partners | Weyerhaeuser vs. Gladstone Land |
| MDJM vs. Old Republic International | MDJM vs. Selective Insurance Group | MDJM vs. SLR Investment Corp | MDJM vs. Cincinnati Financial |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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