Correlation Between Crocs and Rocky Brands
Can any of the company-specific risk be diversified away by investing in both Crocs 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 Crocs and Rocky Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crocs Inc and Rocky Brands, you can compare the effects of market volatilities on Crocs 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 Crocs with a short position of Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Rocky Brands.
Diversification Opportunities for Crocs and Rocky Brands
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crocs and Rocky is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands and Crocs 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 Crocs Inc 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 Crocs i.e., Crocs and Rocky Brands go up and down completely randomly.
Pair Corralation between Crocs and Rocky Brands
Given the investment horizon of 90 days Crocs Inc is expected to under-perform the Rocky Brands. But the stock apears to be less risky and, when comparing its historical volatility, Crocs Inc is 1.34 times less risky than Rocky Brands. The stock trades about -0.18 of its potential returns per unit of risk. The Rocky Brands is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,689 in Rocky Brands on August 25, 2024 and sell it today you would lose (507.00) from holding Rocky Brands or give up 18.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crocs Inc vs. Rocky Brands
Performance |
| Timeline |
| Crocs Inc |
| Rocky Brands |
Crocs and Rocky Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crocs and Rocky Brands
The main advantage of trading using opposite Crocs and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs 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.The idea behind Crocs Inc and Rocky Brands 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.| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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