Correlation Between Weyco and Nio

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

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

Diversification Opportunities for Weyco and Nio

-0.55

Correlation Coefficient

Weyco  Nio

Excellent diversification

The 3 months correlation between Weyco and Nio is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Weyco i.e., Weyco and Nio go up and down completely randomly.

Pair Corralation between Weyco and Nio

Given the investment horizon of 90 days Weyco Group is expected to generate 0.6 times more return on investment than Nio. However, Weyco Group is 1.66 times less risky than Nio. It trades about 0.08 of its potential returns per unit of risk. Nio Class A is currently generating about 0.03 per unit of risk. If you would invest  2,879  in Weyco Group on September 19, 2024 and sell it today you would earn a total of  767.00  from holding Weyco Group or generate 26.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Weyco Group  vs.  Nio Class A

Weyco Group

Risk-Adjusted Performance

2 of 100

Insignificant

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.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Weyco and Nio

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

The idea behind Weyco Group and Nio Class A 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.