Correlation Between American Rebel and Wolverine World

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

Diversification Opportunities for American Rebel and Wolverine World

-0.38

Correlation Coefficient

American Rebel  Wolverine World

Very good diversification

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

Pair Corralation between American Rebel and Wolverine World

Assuming the 90 days horizon American Rebel Holdings is expected to generate 26.73 times more return on investment than Wolverine World. However, American Rebel is 26.73 times more volatile than Wolverine World Wide. It trades about 0.13 of its potential returns per unit of risk. Wolverine World Wide is currently generating about 0.19 per unit of risk. If you would invest  1.50  in American Rebel Holdings on September 1, 2024 and sell it today you would lose (0.68) from holding American Rebel Holdings or give up 45.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

American Rebel Holdings  vs.  Wolverine World Wide

American Rebel Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Rebel Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, American Rebel showed solid returns over the last few months and may actually be approaching a breakup point.

Wolverine World Wide

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wolverine World Wide are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Rebel and Wolverine World

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

The idea behind American Rebel Holdings and Wolverine World Wide 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.