Correlation Between Weyco and Chevron Corp

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Can any of the company-specific risk be diversified away by investing in both Weyco and Chevron Corp 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 Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Chevron Corp, you can compare the effects of market volatilities on Weyco and Chevron Corp 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 Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Chevron Corp.

Diversification Opportunities for Weyco and Chevron Corp

-0.36
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Weyco and Chevron Corp

Given the investment horizon of 90 days Weyco Group is expected to generate 1.33 times more return on investment than Chevron Corp. However, Weyco is 1.33 times more volatile than Chevron Corp. It trades about 0.03 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.02 per unit of risk. If you would invest  2,287  in Weyco Group on January 17, 2024 and sell it today you would earn a total of  575.00  from holding Weyco Group or generate 25.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Weyco Group  vs.  Chevron Corp

 Performance 
       Timeline  
Weyco Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Weyco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Chevron Corp 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Weyco and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Weyco and Chevron Corp

The main advantage of trading using opposite Weyco and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.
The idea behind Weyco Group and Chevron Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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