Correlation Between Adidas AG and American Rebel
Can any of the company-specific risk be diversified away by investing in both Adidas AG and American Rebel 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 Adidas AG and American Rebel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG ADR and American Rebel Holdings, you can compare the effects of market volatilities on Adidas AG and American Rebel 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 Adidas AG with a short position of American Rebel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and American Rebel.
Diversification Opportunities for Adidas AG and American Rebel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Adidas and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG ADR and American Rebel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rebel Holdings and Adidas AG 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 Adidas AG ADR are associated (or correlated) with American Rebel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rebel Holdings has no effect on the direction of Adidas AG i.e., Adidas AG and American Rebel go up and down completely randomly.
Pair Corralation between Adidas AG and American Rebel
Assuming the 90 days horizon Adidas AG is expected to generate 97.81 times less return on investment than American Rebel. But when comparing it to its historical volatility, Adidas AG ADR is 50.5 times less risky than American Rebel. It trades about 0.07 of its potential returns per unit of risk. American Rebel Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5.00 in American Rebel Holdings on August 24, 2024 and sell it today you would lose (4.10) from holding American Rebel Holdings or give up 82.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.67% |
| Values | Daily Returns |
Adidas AG ADR vs. American Rebel Holdings
Performance |
| Timeline |
| Adidas AG ADR |
| American Rebel Holdings |
Adidas AG and American Rebel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adidas AG and American Rebel
The main advantage of trading using opposite Adidas AG and American Rebel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG position performs unexpectedly, American Rebel 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 American Rebel will offset losses from the drop in American Rebel's long position.| Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Crocs Inc |
| American Rebel vs. Haverty Furniture Companies | American Rebel vs. WiMi Hologram Cloud | American Rebel vs. Reservoir Media | American Rebel vs. JBG SMITH Properties |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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