Correlation Between Kits Eyecare and Boat Rocker

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

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

Diversification Opportunities for Kits Eyecare and Boat Rocker

0.37

Correlation Coefficient

Kits Eyecare  Boat Rocker

Weak diversification

The 3 months correlation between Kits and Boat is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kits Eyecare and Boat Rocker Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boat Rocker Media and Kits Eyecare 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 Kits Eyecare are associated (or correlated) with Boat Rocker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boat Rocker Media has no effect on the direction of Kits Eyecare i.e., Kits Eyecare and Boat Rocker go up and down completely randomly.

Pair Corralation between Kits Eyecare and Boat Rocker

Assuming the 90 days trading horizon Kits Eyecare is expected to generate 0.86 times more return on investment than Boat Rocker. However, Kits Eyecare is 1.17 times less risky than Boat Rocker. It trades about 0.2 of its potential returns per unit of risk. Boat Rocker Media is currently generating about 0.08 per unit of risk. If you would invest  837.00  in Kits Eyecare on December 29, 2024 and sell it today you would earn a total of  349.00  from holding Kits Eyecare or generate 41.7% return on investment over 90 days.

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

Kits Eyecare  vs.  Boat Rocker Media

Kits Eyecare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kits Eyecare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Kits Eyecare displayed solid returns over the last few months and may actually be approaching a breakup point.

Boat Rocker Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kits Eyecare and Boat Rocker

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

The idea behind Kits Eyecare and Boat Rocker Media 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.