Correlation Between Weyerhaeuser and United States
Can any of the company-specific risk be diversified away by investing in both Weyerhaeuser and United States 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 Weyerhaeuser and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyerhaeuser and United States Steel, you can compare the effects of market volatilities on Weyerhaeuser and United States 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 Weyerhaeuser with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyerhaeuser and United States.
Diversification Opportunities for Weyerhaeuser and United States
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weyerhaeuser and United is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Weyerhaeuser 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 Weyerhaeuser are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Weyerhaeuser i.e., Weyerhaeuser and United States go up and down completely randomly.
Pair Corralation between Weyerhaeuser and United States
Allowing for the 90-day total investment horizon Weyerhaeuser is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Weyerhaeuser is 1.52 times less risky than United States. The stock trades about -0.58 of its potential returns per unit of risk. The United States Steel is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 4,078 in United States Steel on January 28, 2024 and sell it today you would lose (336.00) from holding United States Steel or give up 8.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Weyerhaeuser vs. United States Steel
Performance |
Timeline |
Weyerhaeuser |
United States Steel |
Weyerhaeuser and United States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weyerhaeuser and United States
The main advantage of trading using opposite Weyerhaeuser and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser position performs unexpectedly, United States 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 States will offset losses from the drop in United States' long position.Weyerhaeuser vs. Rayonier | Weyerhaeuser vs. Lamar Advertising | Weyerhaeuser vs. Farmland Partners | Weyerhaeuser vs. Gladstone Land |
United States vs. Cleveland Cliffs | United States vs. Reliance Steel Aluminum | United States vs. Ternium SA ADR |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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