Correlation Between Rocky Brands and Fluent

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

By analyzing existing cross correlation between Rocky Brands and Fluent Inc, you can compare the effects of market volatilities on Rocky Brands and Fluent 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 Fluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Fluent.

Diversification Opportunities for Rocky Brands and Fluent

0.74

Correlation Coefficient

Rocky Brands  Fluent

Poor diversification

The 3 months correlation between Rocky and Fluent is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of Rocky Brands i.e., Rocky Brands and Fluent go up and down completely randomly.

Pair Corralation between Rocky Brands and Fluent

Given the investment horizon of 90 days Rocky Brands is expected to generate 0.71 times more return on investment than Fluent. However, Rocky Brands is 1.41 times less risky than Fluent. It trades about -0.12 of its potential returns per unit of risk. Fluent Inc is currently generating about -0.11 per unit of risk. If you would invest  2,222  in Rocky Brands on December 19, 2024 and sell it today you would lose (415.00) from holding Rocky Brands or give up 18.68% of portfolio value over 90 days.

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

Rocky Brands  vs.  Fluent Inc

Rocky Brands

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fluent Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Rocky Brands and Fluent

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

The idea behind Rocky Brands and Fluent Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.