Correlation Between Archrock and Weyco

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

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

Diversification Opportunities for Archrock and Weyco

0.74

Correlation Coefficient

Archrock  Weyco

Poor diversification

The 3 months correlation between Archrock and Weyco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Archrock 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 Archrock 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 Archrock i.e., Archrock and Weyco go up and down completely randomly.

Pair Corralation between Archrock and Weyco

Given the investment horizon of 90 days Archrock is expected to generate 0.75 times more return on investment than Weyco. However, Archrock is 1.34 times less risky than Weyco. It trades about 0.21 of its potential returns per unit of risk. Weyco Group is currently generating about 0.06 per unit of risk. If you would invest  1,921  in Archrock on September 5, 2024 and sell it today you would earn a total of  671.00  from holding Archrock or generate 34.93% return on investment over 90 days.

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

Archrock  vs.  Weyco Group

Archrock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Archrock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Weyco Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Archrock and Weyco

The main advantage of trading using opposite Archrock and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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 Archrock 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.