Correlation Between Brunswick and Weyco

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

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

Diversification Opportunities for Brunswick and Weyco

0.13

Correlation Coefficient

Brunswick  Weyco

Average diversification

The 3 months correlation between Brunswick and Weyco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Weyco go up and down completely randomly.

Pair Corralation between Brunswick and Weyco

Allowing for the 90-day total investment horizon Brunswick is expected to generate 10.02 times less return on investment than Weyco. But when comparing it to its historical volatility, Brunswick is 1.24 times less risky than Weyco. It trades about 0.01 of its potential returns per unit of risk. Weyco Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,884  in Weyco Group on September 18, 2024 and sell it today you would earn a total of  645.00  from holding Weyco Group or generate 22.36% return on investment over 90 days.

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

Brunswick  vs.  Weyco Group

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Weyco Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brunswick and Weyco

The main advantage of trading using opposite Brunswick and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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 Brunswick 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.