Correlation Between Rocky Brands and Perella Weinberg

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

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

Diversification Opportunities for Rocky Brands and Perella Weinberg

-0.48

Correlation Coefficient

Rocky Brands  Perella Weinberg

Very good diversification

The 3 months correlation between Rocky and Perella is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Perella Weinberg Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perella Weinberg Partners 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 Perella Weinberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perella Weinberg Partners has no effect on the direction of Rocky Brands i.e., Rocky Brands and Perella Weinberg go up and down completely randomly.

Pair Corralation between Rocky Brands and Perella Weinberg

Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Perella Weinberg. In addition to that, Rocky Brands is 1.27 times more volatile than Perella Weinberg Partners. It trades about -0.01 of its total potential returns per unit of risk. Perella Weinberg Partners is currently generating about 0.15 per unit of volatility. If you would invest  2,036  in Perella Weinberg Partners on October 25, 2024 and sell it today you would earn a total of  582.00  from holding Perella Weinberg Partners or generate 28.59% return on investment over 90 days.

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

Rocky Brands  vs.  Perella Weinberg Partners

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 fairly strong forward-looking signals, Rocky Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Perella Weinberg Partners

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Brands and Perella Weinberg

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

The idea behind Rocky Brands and Perella Weinberg Partners 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.

Check out your portfolio center.

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.