Correlation Between Westwing Comrcio and Wetzel SA

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

By analyzing existing cross correlation between Westwing Comrcio Varejista and Wetzel SA, you can compare the effects of market volatilities on Westwing Comrcio and Wetzel SA 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 Westwing Comrcio with a short position of Wetzel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwing Comrcio and Wetzel SA.

Diversification Opportunities for Westwing Comrcio and Wetzel SA

0.68

Correlation Coefficient

Westwing Comrcio  Wetzel SA

Poor diversification

The 3 months correlation between Westwing and Wetzel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westwing Comrcio Varejista and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA and Westwing Comrcio 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 Westwing Comrcio Varejista are associated (or correlated) with Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of Westwing Comrcio i.e., Westwing Comrcio and Wetzel SA go up and down completely randomly.

Pair Corralation between Westwing Comrcio and Wetzel SA

Assuming the 90 days trading horizon Westwing Comrcio Varejista is expected to generate 0.87 times more return on investment than Wetzel SA. However, Westwing Comrcio Varejista is 1.15 times less risky than Wetzel SA. It trades about -0.08 of its potential returns per unit of risk. Wetzel SA is currently generating about -0.11 per unit of risk. If you would invest  680.00  in Westwing Comrcio Varejista on November 27, 2024 and sell it today you would lose (145.00) from holding Westwing Comrcio Varejista or give up 21.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Westwing Comrcio Varejista  vs.  Wetzel SA

Westwing Comrcio Var

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westwing Comrcio Varejista has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wetzel SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wetzel SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Westwing Comrcio and Wetzel SA

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

The idea behind Westwing Comrcio Varejista and Wetzel SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.