Correlation Between Rocky Brands and Empresa Distribuidora

Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Empresa Distribuidora 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 Rocky Brands and Empresa Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rocky Brands and Empresa Distribuidora y, you can compare the effects of market volatilities on Rocky Brands and Empresa Distribuidora 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 Rocky Brands with a short position of Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Empresa Distribuidora.

Diversification Opportunities for Rocky Brands and Empresa Distribuidora

-0.76

Correlation Coefficient

Rocky Brands  Empresa Distribuidora

Pay attention - limited upside

The 3 months correlation between Rocky and Empresa is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora and Rocky Brands 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 Rocky Brands are associated (or correlated) with Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Rocky Brands i.e., Rocky Brands and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Rocky Brands and Empresa Distribuidora

Given the investment horizon of 90 days Rocky Brands is expected to generate 6.29 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, Rocky Brands is 1.76 times less risky than Empresa Distribuidora. It trades about 0.04 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,817  in Empresa Distribuidora y on September 24, 2024 and sell it today you would earn a total of  405.00  from holding Empresa Distribuidora y or generate 10.61% return on investment over 90 days.

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

Rocky Brands  vs.  Empresa Distribuidora y

Rocky Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain fairly 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.

Empresa Distribuidora

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Brands and Empresa Distribuidora

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

The idea behind Rocky Brands and Empresa Distribuidora y 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.