Correlation Between Rocky Brands and Kodiak Gas

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

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

Diversification Opportunities for Rocky Brands and Kodiak Gas

-0.63

Correlation Coefficient

Rocky Brands  Kodiak Gas

Excellent diversification

The 3 months correlation between Rocky and Kodiak is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Rocky Brands i.e., Rocky Brands and Kodiak Gas go up and down completely randomly.

Pair Corralation between Rocky Brands and Kodiak Gas

Given the investment horizon of 90 days Rocky Brands is expected to generate 0.8 times more return on investment than Kodiak Gas. However, Rocky Brands is 1.26 times less risky than Kodiak Gas. It trades about 0.03 of its potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.01 per unit of risk. If you would invest  2,238  in Rocky Brands on October 11, 2024 and sell it today you would earn a total of  22.00  from holding Rocky Brands or generate 0.98% 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.  Kodiak Gas Services,

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

Kodiak Gas Services,

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Brands and Kodiak Gas

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

The idea behind Rocky Brands and Kodiak Gas Services, 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 CEOs Directory module to screen CEOs from public companies around the world.