Correlation Between American Rebel and Adidas AG

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

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

Diversification Opportunities for American Rebel and Adidas AG

0.33

Correlation Coefficient

American Rebel  Adidas AG

Weak diversification

The 3 months correlation between American and Adidas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Rebel Holdings and Adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adidas AG and American Rebel 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 American Rebel Holdings are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adidas AG has no effect on the direction of American Rebel i.e., American Rebel and Adidas AG go up and down completely randomly.

Pair Corralation between American Rebel and Adidas AG

Given the investment horizon of 90 days American Rebel Holdings is expected to generate 5.55 times more return on investment than Adidas AG. However, American Rebel is 5.55 times more volatile than Adidas AG. It trades about 0.04 of its potential returns per unit of risk. Adidas AG is currently generating about 0.03 per unit of risk. If you would invest  292.00  in American Rebel Holdings on September 2, 2024 and sell it today you would lose (87.00) from holding American Rebel Holdings or give up 29.79% of portfolio value over 90 days.

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

American Rebel Holdings  vs.  Adidas AG

American Rebel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Rebel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Adidas AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adidas AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Adidas AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Rebel and Adidas AG

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

The idea behind American Rebel Holdings and Adidas AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.