Correlation Between Weyco and Deckers Outdoor

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

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

Diversification Opportunities for Weyco and Deckers Outdoor

0.01

Correlation Coefficient

Weyco  Deckers Outdoor

Significant diversification

The 3 months correlation between Weyco and Deckers is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor 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 Deckers Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deckers Outdoor has no effect on the direction of Weyco i.e., Weyco and Deckers Outdoor go up and down completely randomly.

Pair Corralation between Weyco and Deckers Outdoor

Given the investment horizon of 90 days Weyco is expected to generate 1.38 times less return on investment than Deckers Outdoor. But when comparing it to its historical volatility, Weyco Group is 1.14 times less risky than Deckers Outdoor. It trades about 0.06 of its potential returns per unit of risk. Deckers Outdoor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,829  in Deckers Outdoor on December 1, 2024 and sell it today you would earn a total of  7,020  from holding Deckers Outdoor or generate 102.8% 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.  Deckers Outdoor

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.

Deckers Outdoor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deckers Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Weyco and Deckers Outdoor

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

The idea behind Weyco Group and Deckers Outdoor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.