Correlation Between CDW Corp and Rocky Brands
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Rocky Brands 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 CDW Corp and Rocky Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Rocky Brands, you can compare the effects of market volatilities on CDW Corp and Rocky Brands 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 CDW Corp with a short position of Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Rocky Brands.
Diversification Opportunities for CDW Corp and Rocky Brands
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CDW and Rocky is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands and CDW Corp 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 CDW Corp are associated (or correlated) with Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of CDW Corp i.e., CDW Corp and Rocky Brands go up and down completely randomly.
Pair Corralation between CDW Corp and Rocky Brands
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Rocky Brands. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.23 times less risky than Rocky Brands. The stock trades about -0.15 of its potential returns per unit of risk. The Rocky Brands is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,047 in Rocky Brands on September 2, 2024 and sell it today you would earn a total of 123.00 from holding Rocky Brands or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Rocky Brands
Performance |
| Timeline |
| CDW Corp |
| Rocky Brands |
CDW Corp and Rocky Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Rocky Brands
The main advantage of trading using opposite CDW Corp and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Rocky Brands 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 Brands will offset losses from the drop in Rocky Brands' long position.| CDW Corp vs. Knowles Cor | CDW Corp vs. Ubiquiti Networks | CDW Corp vs. AmpliTech Group | CDW Corp vs. Viavi Solutions |
| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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