Correlation Between Woolworths Group and Weis Markets

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

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

Diversification Opportunities for Woolworths Group and Weis Markets

-0.36

Correlation Coefficient

Woolworths Group  Weis Markets

Very good diversification

The 3 months correlation between Woolworths and Weis is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets and Woolworths Group 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 Woolworths Group Limited are associated (or correlated) with Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Woolworths Group i.e., Woolworths Group and Weis Markets go up and down completely randomly.

Pair Corralation between Woolworths Group and Weis Markets

Assuming the 90 days horizon Woolworths Group is expected to generate 1.39 times less return on investment than Weis Markets. In addition to that, Woolworths Group is 2.83 times more volatile than Weis Markets. It trades about 0.04 of its total potential returns per unit of risk. Weis Markets is currently generating about 0.14 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Woolworths Group Limited  vs.  Weis Markets

Woolworths Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woolworths Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Woolworths Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Woolworths Group and Weis Markets

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

The idea behind Woolworths Group Limited and Weis Markets 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.