Correlation Between Rocky Brands and American Airlines
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and American Airlines 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 Rocky Brands and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and American Airlines Group, you can compare the effects of market volatilities on Rocky Brands and American Airlines 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 Rocky Brands with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and American Airlines.
Diversification Opportunities for Rocky Brands and American Airlines
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rocky and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Rocky 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 Rocky Brands are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Rocky Brands i.e., Rocky Brands and American Airlines go up and down completely randomly.
Pair Corralation between Rocky Brands and American Airlines
Given the investment horizon of 90 days Rocky Brands is expected to under-perform the American Airlines. In addition to that, Rocky Brands is 1.26 times more volatile than American Airlines Group. It trades about -0.3 of its total potential returns per unit of risk. American Airlines Group is currently generating about -0.2 per unit of volatility. If you would invest 1,146 in American Airlines Group on January 10, 2025 and sell it today you would lose (195.00) from holding American Airlines Group or give up 17.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Brands vs. American Airlines Group
Performance |
| Timeline |
| Rocky Brands |
| American Airlines |
Rocky Brands and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and American Airlines
The main advantage of trading using opposite Rocky Brands and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, American Airlines 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 Airlines will offset losses from the drop in American Airlines' long position.| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
| American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings | American Airlines vs. Frontier Group Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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