Correlation Between American Rebel and Dr Martens

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

Diversification Opportunities for American Rebel and Dr Martens

-0.1

Correlation Coefficient

American Rebel  Dr Martens

Good diversification

The 3 months correlation between American and DOCMF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Rebel Holdings and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc 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 Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of American Rebel i.e., American Rebel and Dr Martens go up and down completely randomly.

Pair Corralation between American Rebel and Dr Martens

Assuming the 90 days horizon American Rebel Holdings is expected to generate 13.49 times more return on investment than Dr Martens. However, American Rebel is 13.49 times more volatile than Dr Martens plc. It trades about 0.16 of its potential returns per unit of risk. Dr Martens plc is currently generating about 0.0 per unit of risk. If you would invest  0.82  in American Rebel Holdings on November 29, 2024 and sell it today you would earn a total of  0.85  from holding American Rebel Holdings or generate 103.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

American Rebel Holdings  vs.  Dr Martens plc

American Rebel Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Rebel Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, American Rebel showed solid returns over the last few months and may actually be approaching a breakup point.

Dr Martens plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dr Martens plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Dr Martens 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 Dr Martens

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

The idea behind American Rebel Holdings and Dr Martens plc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.