Correlation Between Rocky Mountain and CNJ Capital

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

By analyzing existing cross correlation between Rocky Mountain Liquor and CNJ Capital Investments, you can compare the effects of market volatilities on Rocky Mountain and CNJ Capital 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 Mountain with a short position of CNJ Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and CNJ Capital.

Diversification Opportunities for Rocky Mountain and CNJ Capital

0.0

Correlation Coefficient

Rocky Mountain  CNJ Capital

Pay attention - limited upside

The 3 months correlation between Rocky and CNJ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor and CNJ Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNJ Capital Investments and Rocky Mountain 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 Mountain Liquor are associated (or correlated) with CNJ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNJ Capital Investments has no effect on the direction of Rocky Mountain i.e., Rocky Mountain and CNJ Capital go up and down completely randomly.

Pair Corralation between Rocky Mountain and CNJ Capital

If you would invest  10.00  in Rocky Mountain Liquor on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Rocky Mountain Liquor or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rocky Mountain Liquor  vs.  CNJ Capital Investments

Rocky Mountain Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Liquor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rocky Mountain and CNJ Capital

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

The idea behind Rocky Mountain Liquor and CNJ Capital Investments 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.