Correlation Between Weyco and Acme United

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

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

Diversification Opportunities for Weyco and Acme United

-0.22

Correlation Coefficient

Weyco  Acme United

Very good diversification

The 3 months correlation between Weyco and Acme is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and Weyco 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 Weyco Group are associated (or correlated) with Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of Weyco i.e., Weyco and Acme United go up and down completely randomly.

Pair Corralation between Weyco and Acme United

Given the investment horizon of 90 days Weyco is expected to generate 1.51 times less return on investment than Acme United. But when comparing it to its historical volatility, Weyco Group is 1.39 times less risky than Acme United. It trades about 0.04 of its potential returns per unit of risk. Acme United is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,252  in Acme United on October 15, 2024 and sell it today you would earn a total of  1,259  from holding Acme United or generate 55.91% return on investment over 90 days.

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

Weyco Group  vs.  Acme United

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 unfluctuating basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Acme United

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Weyco and Acme United

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

The idea behind Weyco Group and Acme United 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.