Correlation Between Target and Weis Markets

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

Diversification Opportunities for Target and Weis Markets

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Target and Weis is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Target and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets and Target 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 Target 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 Target i.e., Target and Weis Markets go up and down completely randomly.

Pair Corralation between Target and Weis Markets

Considering the 90-day investment horizon Target is expected to generate 1.69 times more return on investment than Weis Markets. However, Target is 1.69 times more volatile than Weis Markets. It trades about 0.23 of its potential returns per unit of risk. Weis Markets is currently generating about 0.17 per unit of risk. If you would invest  15,199  in Target on December 29, 2023 and sell it today you would earn a total of  2,268  from holding Target or generate 14.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Target  vs.  Weis Markets

 Performance 
       Timeline  
Target 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.
Weis Markets 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Weis Markets is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Target and Weis Markets Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Target and Weis Markets

The main advantage of trading using opposite Target and Weis Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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