Correlation Between DELCATH SYS and Weyerhaeuser

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

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

Diversification Opportunities for DELCATH SYS and Weyerhaeuser

0.69

Correlation Coefficient

DELCATH SYS  Weyerhaeuser

Poor diversification

The 3 months correlation between DELCATH and Weyerhaeuser is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DELCATH SYS NEW and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser and DELCATH SYS 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 DELCATH SYS NEW are associated (or correlated) with Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of DELCATH SYS i.e., DELCATH SYS and Weyerhaeuser go up and down completely randomly.

Pair Corralation between DELCATH SYS and Weyerhaeuser

Assuming the 90 days trading horizon DELCATH SYS NEW is expected to generate 3.0 times more return on investment than Weyerhaeuser. However, DELCATH SYS is 3.0 times more volatile than Weyerhaeuser. It trades about 0.05 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.03 per unit of risk. If you would invest  1,140  in DELCATH SYS NEW on December 25, 2024 and sell it today you would earn a total of  90.00  from holding DELCATH SYS NEW 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

DELCATH SYS NEW  vs.  Weyerhaeuser

DELCATH SYS NEW

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DELCATH SYS NEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DELCATH SYS reported solid returns over the last few months and may actually be approaching a breakup point.

Weyerhaeuser

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weyerhaeuser are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Weyerhaeuser is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DELCATH SYS and Weyerhaeuser

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

The idea behind DELCATH SYS NEW and Weyerhaeuser 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.