Correlation Between Rocky Brands and Lindblad Expeditions

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

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

Diversification Opportunities for Rocky Brands and Lindblad Expeditions

-0.78

Correlation Coefficient

Rocky Brands  Lindblad Expeditions

Pay attention - limited upside

The 3 months correlation between Rocky and Lindblad is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Rocky Brands i.e., Rocky Brands and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Rocky Brands and Lindblad Expeditions

Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Lindblad Expeditions. But the stock apears to be less risky and, when comparing its historical volatility, Rocky Brands is 1.07 times less risky than Lindblad Expeditions. The stock trades about -0.11 of its potential returns per unit of risk. The Lindblad Expeditions Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Lindblad Expeditions Holdings on September 2, 2024 and sell it today you would earn a total of  372.00  from holding Lindblad Expeditions Holdings or generate 38.99% 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.  Lindblad Expeditions Holdings

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lindblad Expeditions

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Brands and Lindblad Expeditions

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

The idea behind Rocky Brands and Lindblad Expeditions Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.