Correlation Between American Rebel and Continental

Can any of the company-specific risk be diversified away by investing in both American Rebel and Continental 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 Continental 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 Caleres, you can compare the effects of market volatilities on American Rebel and Continental 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 Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Rebel and Continental.

Diversification Opportunities for American Rebel and Continental

0.68

Correlation Coefficient

American Rebel  Continental

Poor diversification

The 3 months correlation between American and Continental is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Rebel Holdings and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of American Rebel i.e., American Rebel and Continental go up and down completely randomly.

Pair Corralation between American Rebel and Continental

Given the investment horizon of 90 days American Rebel Holdings is expected to under-perform the Continental. In addition to that, American Rebel is 2.35 times more volatile than Caleres. It trades about -0.21 of its total potential returns per unit of risk. Caleres is currently generating about -0.3 per unit of volatility. If you would invest  3,098  in Caleres on November 29, 2024 and sell it today you would lose (1,497) from holding Caleres or give up 48.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

American Rebel Holdings  vs.  Caleres

American Rebel Holdings

Risk-Adjusted Performance

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Continental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with American Rebel and Continental

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

The idea behind American Rebel Holdings and Caleres 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.