Correlation Between Boston Omaha and Weyco

Can any of the company-specific risk be diversified away by investing in both Boston Omaha and Weyco 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 Boston Omaha and Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Omaha Corp and Weyco Group, you can compare the effects of market volatilities on Boston Omaha and Weyco 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 Boston Omaha with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Weyco.

Diversification Opportunities for Boston Omaha and Weyco

0.17

Correlation Coefficient

Boston Omaha  Weyco

Average diversification

The 3 months correlation between Boston and Weyco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Boston Omaha 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 Boston Omaha Corp are associated (or correlated) with Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Boston Omaha i.e., Boston Omaha and Weyco go up and down completely randomly.

Pair Corralation between Boston Omaha and Weyco

Considering the 90-day investment horizon Boston Omaha Corp is expected to under-perform the Weyco. But the stock apears to be less risky and, when comparing its historical volatility, Boston Omaha Corp is 1.51 times less risky than Weyco. The stock trades about -0.16 of its potential returns per unit of risk. The Weyco Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,077  in Weyco Group on October 7, 2024 and sell it today you would lose (403.00) from holding Weyco Group or give up 9.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boston Omaha Corp  vs.  Weyco Group

Boston Omaha Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Omaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Weyco Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Omaha and Weyco

The main advantage of trading using opposite Boston Omaha and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco's long position.

The idea behind Boston Omaha Corp and Weyco Group 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.