Correlation Between Solo Brands and Rocky Brands
Can any of the company-specific risk be diversified away by investing in both Solo Brands 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 Solo Brands and Rocky Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and Rocky Brands, you can compare the effects of market volatilities on Solo Brands 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 Solo Brands with a short position of Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and Rocky Brands.
Diversification Opportunities for Solo Brands and Rocky Brands
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solo and Rocky is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands and Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and Rocky Brands go up and down completely randomly.
Pair Corralation between Solo Brands and Rocky Brands
Considering the 90-day investment horizon Solo Brands is expected to generate 0.86 times more return on investment than Rocky Brands. However, Solo Brands is 1.16 times less risky than Rocky Brands. It trades about 0.0 of its potential returns per unit of risk. Rocky Brands is currently generating about -0.14 per unit of risk. If you would invest 130.00 in Solo Brands on August 30, 2024 and sell it today you would lose (4.00) from holding Solo Brands or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. Rocky Brands
Performance |
| Timeline |
| Solo Brands |
| Rocky Brands |
Solo Brands and Rocky Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and Rocky Brands
The main advantage of trading using opposite Solo Brands and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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.| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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