Correlation Between ALLSTATE and Weyco

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

By analyzing existing cross correlation between ALLSTATE P 555 and Weyco Group, you can compare the effects of market volatilities on ALLSTATE 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 ALLSTATE with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Weyco.

Diversification Opportunities for ALLSTATE and Weyco

-0.02

Correlation Coefficient

ALLSTATE  Weyco

Good diversification

The 3 months correlation between ALLSTATE and Weyco is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 555 and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and ALLSTATE 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 ALLSTATE P 555 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 ALLSTATE i.e., ALLSTATE and Weyco go up and down completely randomly.

Pair Corralation between ALLSTATE and Weyco

Assuming the 90 days trading horizon ALLSTATE is expected to generate 1.14 times less return on investment than Weyco. But when comparing it to its historical volatility, ALLSTATE P 555 is 2.52 times less risky than Weyco. It trades about 0.06 of its potential returns per unit of risk. Weyco Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,435  in Weyco Group on October 23, 2024 and sell it today you would earn a total of  93.00  from holding Weyco Group or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

ALLSTATE P 555  vs.  Weyco Group

ALLSTATE P 555

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALLSTATE P 555 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Weyco Group

Risk-Adjusted Performance

2 of 100

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 ALLSTATE and Weyco

The main advantage of trading using opposite ALLSTATE and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLSTATE 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 ALLSTATE P 555 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..