Correlation Between Outfront Media and Weyerhaeuser

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

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

Diversification Opportunities for Outfront Media and Weyerhaeuser

-0.05

Correlation Coefficient

Outfront Media  Weyerhaeuser

Good diversification

The 3 months correlation between Outfront and Weyerhaeuser is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Outfront Media and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser and Outfront Media 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 Outfront Media are associated (or correlated) with Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of Outfront Media i.e., Outfront Media and Weyerhaeuser go up and down completely randomly.

Pair Corralation between Outfront Media and Weyerhaeuser

Considering the 90-day investment horizon Outfront Media is expected to generate 0.93 times more return on investment than Weyerhaeuser. However, Outfront Media is 1.07 times less risky than Weyerhaeuser. It trades about 0.19 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.0 per unit of risk. If you would invest  1,619  in Outfront Media on September 12, 2024 and sell it today you would earn a total of  263.00  from holding Outfront Media or generate 16.24% return on investment over 90 days.

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

Outfront Media  vs.  Weyerhaeuser

Outfront Media

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outfront Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Outfront Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Weyerhaeuser

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Weyerhaeuser has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Weyerhaeuser is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Outfront Media and Weyerhaeuser

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

The idea behind Outfront Media and Weyerhaeuser 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.