Correlation Between Designer Brands and Weyco

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

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

Diversification Opportunities for Designer Brands and Weyco

-0.31

Correlation Coefficient

Designer Brands  Weyco

Very good diversification

The 3 months correlation between Designer and Weyco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Weyco go up and down completely randomly.

Pair Corralation between Designer Brands and Weyco

Considering the 90-day investment horizon Designer Brands is expected to generate 2.39 times more return on investment than Weyco. However, Designer Brands is 2.39 times more volatile than Weyco Group. It trades about 0.05 of its potential returns per unit of risk. Weyco Group is currently generating about 0.03 per unit of risk. If you would invest  483.00  in Designer Brands on November 19, 2024 and sell it today you would earn a total of  34.00  from holding Designer Brands or generate 7.04% return on investment over 90 days.

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

Designer Brands  vs.  Weyco Group

Designer Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental drivers, Designer Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Weyco Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weyco is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Designer Brands and Weyco

The main advantage of trading using opposite Designer Brands and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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 Designer Brands 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.