Correlation Between Weyco and Origin Materials

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

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

Diversification Opportunities for Weyco and Origin Materials

-0.56

Correlation Coefficient

Weyco  Origin Materials

Excellent diversification

The 3 months correlation between Weyco and Origin is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Weyco i.e., Weyco and Origin Materials go up and down completely randomly.

Pair Corralation between Weyco and Origin Materials

Given the investment horizon of 90 days Weyco Group is expected to generate 0.33 times more return on investment than Origin Materials. However, Weyco Group is 3.05 times less risky than Origin Materials. It trades about 0.04 of its potential returns per unit of risk. Origin Materials is currently generating about -0.01 per unit of risk. If you would invest  2,483  in Weyco Group on October 15, 2024 and sell it today you would earn a total of  964.00  from holding Weyco Group or generate 38.82% return on investment over 90 days.

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

Weyco Group  vs.  Origin Materials

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.

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Weyco and Origin Materials

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

The idea behind Weyco Group and Origin Materials 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.