Correlation Between Weis Markets and Koninklijke Ahold

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

By analyzing existing cross correlation between Weis Markets and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on Weis Markets and Koninklijke Ahold 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 Weis Markets with a short position of Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weis Markets and Koninklijke Ahold.

Diversification Opportunities for Weis Markets and Koninklijke Ahold

0.74

Correlation Coefficient

Weis Markets  Koninklijke Ahold

Poor diversification

The 3 months correlation between Weis and Koninklijke is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and Weis Markets 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 Weis Markets are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of Weis Markets i.e., Weis Markets and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Weis Markets and Koninklijke Ahold

Considering the 90-day investment horizon Weis Markets is expected to generate 0.83 times more return on investment than Koninklijke Ahold. However, Weis Markets is 1.21 times less risky than Koninklijke Ahold. It trades about 0.14 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.11 per unit of risk. If you would invest  6,718  in Weis Markets on December 29, 2024 and sell it today you would earn a total of  1,011  from holding Weis Markets or generate 15.05% return on investment over 90 days.

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

Weis Markets  vs.  Koninklijke Ahold Delhaize

Weis Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Weis Markets disclosed solid returns over the last few months and may actually be approaching a breakup point.

Koninklijke Ahold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Koninklijke Ahold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weis Markets and Koninklijke Ahold

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

The idea behind Weis Markets and Koninklijke Ahold Delhaize 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 Commodity Directory module to find actively traded commodities issued by global exchanges.