Correlation Between Rocky Brands and 00108WAP5

Can any of the company-specific risk be diversified away by investing in both Rocky Brands and 00108WAP5 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 00108WAP5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rocky Brands and AEP 47 15 MAY 32, you can compare the effects of market volatilities on Rocky Brands and 00108WAP5 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 00108WAP5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and 00108WAP5.

Diversification Opportunities for Rocky Brands and 00108WAP5

0.5

Correlation Coefficient

Rocky Brands  00108WAP5

Very weak diversification

The 3 months correlation between Rocky and 00108WAP5 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and AEP 47 15 MAY 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP 47 15 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 00108WAP5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP 47 15 has no effect on the direction of Rocky Brands i.e., Rocky Brands and 00108WAP5 go up and down completely randomly.

Pair Corralation between Rocky Brands and 00108WAP5

Given the investment horizon of 90 days Rocky Brands is expected to generate 4.76 times more return on investment than 00108WAP5. However, Rocky Brands is 4.76 times more volatile than AEP 47 15 MAY 32. It trades about 0.03 of its potential returns per unit of risk. AEP 47 15 MAY 32 is currently generating about -0.2 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Rocky Brands  vs.  AEP 47 15 MAY 32

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.

AEP 47 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP 47 15 MAY 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAP5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rocky Brands and 00108WAP5

The main advantage of trading using opposite Rocky Brands and 00108WAP5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, 00108WAP5 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 00108WAP5 will offset losses from the drop in 00108WAP5's long position.

The idea behind Rocky Brands and AEP 47 15 MAY 32 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.