Correlation Between Senvest Capital and Rocky Mountain

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

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

Diversification Opportunities for Senvest Capital and Rocky Mountain

-0.16

Correlation Coefficient

Senvest Capital  Rocky Mountain

Good diversification

The 3 months correlation between Senvest and Rocky is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor and Senvest Capital 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 Senvest Capital are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Senvest Capital i.e., Senvest Capital and Rocky Mountain go up and down completely randomly.

Pair Corralation between Senvest Capital and Rocky Mountain

Assuming the 90 days trading horizon Senvest Capital is expected to generate 8.23 times less return on investment than Rocky Mountain. But when comparing it to its historical volatility, Senvest Capital is 5.87 times less risky than Rocky Mountain. It trades about 0.04 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Rocky Mountain Liquor on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Rocky Mountain Liquor or generate 11.11% return on investment over 90 days.

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

Senvest Capital  vs.  Rocky Mountain Liquor

Senvest Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Rocky Mountain Liquor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Mountain Liquor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Rocky Mountain showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senvest Capital and Rocky Mountain

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

The idea behind Senvest Capital and Rocky Mountain Liquor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.