Correlation Between Weyerhaeuser and Centerspace

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

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

Diversification Opportunities for Weyerhaeuser and Centerspace

0.54

Correlation Coefficient

Weyerhaeuser  Centerspace

Very weak diversification

The 3 months correlation between Weyerhaeuser and Centerspace is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace and Weyerhaeuser 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 Weyerhaeuser are associated (or correlated) with Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of Weyerhaeuser i.e., Weyerhaeuser and Centerspace go up and down completely randomly.

Pair Corralation between Weyerhaeuser and Centerspace

Allowing for the 90-day total investment horizon Weyerhaeuser is expected to generate 1.14 times more return on investment than Centerspace. However, Weyerhaeuser is 1.14 times more volatile than Centerspace. It trades about -0.01 of its potential returns per unit of risk. Centerspace is currently generating about -0.11 per unit of risk. If you would invest  2,562  in Weyerhaeuser on May 3, 2025 and sell it today you would lose (54.00) from holding Weyerhaeuser or give up 2.11% of portfolio value over 90 days.

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

Weyerhaeuser  vs.  Centerspace

Weyerhaeuser

Risk-Adjusted Performance

Very 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.

Centerspace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centerspace has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Weyerhaeuser and Centerspace

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

The idea behind Weyerhaeuser and Centerspace 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.