Correlation Between Weyco and United Homes

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

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

Diversification Opportunities for Weyco and United Homes

0.58

Correlation Coefficient

Weyco  United Homes

Very weak diversification

The 3 months correlation between Weyco and United is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes Group 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of Weyco i.e., Weyco and United Homes go up and down completely randomly.

Pair Corralation between Weyco and United Homes

Given the investment horizon of 90 days Weyco Group is expected to generate 0.82 times more return on investment than United Homes. However, Weyco Group is 1.22 times less risky than United Homes. It trades about 0.06 of its potential returns per unit of risk. United Homes Group is currently generating about 0.01 per unit of risk. If you would invest  3,258  in Weyco Group on September 4, 2024 and sell it today you would earn a total of  341.00  from holding Weyco Group or generate 10.47% return on investment over 90 days.

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

Weyco Group  vs.  United Homes Group

Weyco Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco unveiled solid returns over the last few months and may actually be approaching a breakup point.

United Homes Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Homes Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, United Homes is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Weyco and United Homes

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

The idea behind Weyco Group and United Homes Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.