Correlation Between Rocky Brands and First Business
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and First Business 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 First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and First Business Financial, you can compare the effects of market volatilities on Rocky Brands and First Business 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 First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and First Business.
Diversification Opportunities for Rocky Brands and First Business
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rocky and First is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial 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 First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Rocky Brands i.e., Rocky Brands and First Business go up and down completely randomly.
Pair Corralation between Rocky Brands and First Business
Given the investment horizon of 90 days Rocky Brands is expected to under-perform the First Business. In addition to that, Rocky Brands is 1.61 times more volatile than First Business Financial. It trades about -0.09 of its total potential returns per unit of risk. First Business Financial is currently generating about 0.15 per unit of volatility. If you would invest 3,357 in First Business Financial on August 30, 2024 and sell it today you would earn a total of 1,694 from holding First Business Financial or generate 50.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Brands vs. First Business Financial
Performance |
| Timeline |
| Rocky Brands |
| First Business Financial |
Rocky Brands and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and First Business
The main advantage of trading using opposite Rocky Brands and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
| First Business vs. SVB T Corp | First Business vs. First Capital | First Business vs. Pioneer Bankcorp | First Business vs. Liberty Northwest Bancorp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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