Correlation Between Westrock Coffee and Weyco

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

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

Diversification Opportunities for Westrock Coffee and Weyco

0.51

Correlation Coefficient

Westrock Coffee  Weyco

Very weak diversification

The 3 months correlation between Westrock and Weyco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Weyco go up and down completely randomly.

Pair Corralation between Westrock Coffee and Weyco

Given the investment horizon of 90 days Westrock Coffee is expected to generate 0.88 times more return on investment than Weyco. However, Westrock Coffee is 1.14 times less risky than Weyco. It trades about 0.08 of its potential returns per unit of risk. Weyco Group is currently generating about -0.08 per unit of risk. If you would invest  1,022  in Westrock Coffee on February 2, 2024 and sell it today you would earn a total of  21.00  from holding Westrock Coffee or generate 2.05% return on investment over 90 days.

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

Westrock Coffee  vs.  Weyco Group

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Weyco Group

Risk-Adjusted Performance

0 of 100

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 unfluctuating 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.

Pair Trading with Westrock Coffee and Weyco

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

The idea behind Westrock Coffee and Weyco Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.