Correlation Between Weyco and Analog Devices

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

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

Diversification Opportunities for Weyco and Analog Devices

0.03

Correlation Coefficient

Weyco  Analog Devices

Significant diversification

The 3 months correlation between Weyco and Analog is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Weyco i.e., Weyco and Analog Devices go up and down completely randomly.

Pair Corralation between Weyco and Analog Devices

Given the investment horizon of 90 days Weyco Group is expected to generate 1.15 times more return on investment than Analog Devices. However, Weyco is 1.15 times more volatile than Analog Devices. It trades about 0.05 of its potential returns per unit of risk. Analog Devices is currently generating about 0.04 per unit of risk. If you would invest  2,092  in Weyco Group on December 4, 2024 and sell it today you would earn a total of  1,263  from holding Weyco Group or generate 60.37% return on investment over 90 days.

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

Weyco Group  vs.  Analog Devices

Weyco Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weyco Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Analog Devices

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Weyco and Analog Devices

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

The idea behind Weyco Group and Analog Devices 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.