Correlation Between Rocky Brands and Black Hills
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Black Hills 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 Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and Black Hills, you can compare the effects of market volatilities on Rocky Brands and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Black Hills.
Diversification Opportunities for Rocky Brands and Black Hills
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rocky and Black is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Rocky Brands i.e., Rocky Brands and Black Hills go up and down completely randomly.
Pair Corralation between Rocky Brands and Black Hills
Given the investment horizon of 90 days Rocky Brands is expected to generate 2.41 times less return on investment than Black Hills. In addition to that, Rocky Brands is 1.81 times more volatile than Black Hills. It trades about 0.1 of its total potential returns per unit of risk. Black Hills is currently generating about 0.45 per unit of volatility. If you would invest 5,700 in Black Hills on September 3, 2024 and sell it today you would earn a total of 707.00 from holding Black Hills or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Brands vs. Black Hills
Performance |
| Timeline |
| Rocky Brands |
| Black Hills |
Rocky Brands and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and Black Hills
The main advantage of trading using opposite Rocky Brands and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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