Correlation Between Weis Markets and Dingdong ADR

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

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

Diversification Opportunities for Weis Markets and Dingdong ADR

0.38

Correlation Coefficient

Weis Markets  Dingdong ADR

Weak diversification

The 3 months correlation between Weis and Dingdong is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR and Weis Markets 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 Weis Markets are associated (or correlated) with Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of Weis Markets i.e., Weis Markets and Dingdong ADR go up and down completely randomly.

Pair Corralation between Weis Markets and Dingdong ADR

Considering the 90-day investment horizon Weis Markets is expected to under-perform the Dingdong ADR. But the stock apears to be less risky and, when comparing its historical volatility, Weis Markets is 3.08 times less risky than Dingdong ADR. The stock trades about -0.16 of its potential returns per unit of risk. The Dingdong ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Dingdong ADR on September 9, 2024 and sell it today you would earn a total of  22.00  from holding Dingdong ADR or generate 5.25% return on investment over 90 days.

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

Weis Markets  vs.  Dingdong ADR

Weis Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish primary indicators, Weis Markets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dingdong ADR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dingdong ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Dingdong ADR disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weis Markets and Dingdong ADR

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

The idea behind Weis Markets and Dingdong ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.