Correlation Between Ralph Lauren and WesBanco

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

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

Diversification Opportunities for Ralph Lauren and WesBanco

0.31

Correlation Coefficient

Ralph Lauren  WesBanco

Weak diversification

The 3 months correlation between Ralph and WesBanco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and WesBanco go up and down completely randomly.

Pair Corralation between Ralph Lauren and WesBanco

Allowing for the 90-day total investment horizon Ralph Lauren is expected to generate 1.06 times less return on investment than WesBanco. In addition to that, Ralph Lauren is 8.49 times more volatile than WesBanco. It trades about 0.01 of its total potential returns per unit of risk. WesBanco is currently generating about 0.11 per unit of volatility. If you would invest  2,477  in WesBanco on December 25, 2024 and sell it today you would earn a total of  47.00  from holding WesBanco or generate 1.9% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  WesBanco

Ralph Lauren Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

WesBanco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ralph Lauren and WesBanco

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

The idea behind Ralph Lauren Corp and WesBanco 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.