Correlation Between Rocky Brands and Levi Strauss

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Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Levi Strauss 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 Levi Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and Levi Strauss Co, you can compare the effects of market volatilities on Rocky Brands and Levi Strauss 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 Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Levi Strauss.

Diversification Opportunities for Rocky Brands and Levi Strauss

RockyLeviDiversified AwayRockyLeviDiversified Away100%
0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Rocky and Levi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss 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 Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of Rocky Brands i.e., Rocky Brands and Levi Strauss go up and down completely randomly.

Pair Corralation between Rocky Brands and Levi Strauss

Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Levi Strauss. But the stock apears to be less risky and, when comparing its historical volatility, Rocky Brands is 1.15 times less risky than Levi Strauss. The stock trades about -0.07 of its potential returns per unit of risk. The Levi Strauss Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,741  in Levi Strauss Co on November 21, 2024 and sell it today you would earn a total of  86.00  from holding Levi Strauss Co or generate 4.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Rocky Brands  vs.  Levi Strauss Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15RCKY LEVI
       Timeline  
Rocky Brands 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Rocky Brands showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb20212223242526
Levi Strauss 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Levi Strauss Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Levi Strauss demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.51616.51717.51818.51919.5

Rocky Brands and Levi Strauss Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.72-5.03-3.35-1.660.01.73.465.226.988.74 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15RCKY LEVI
       Returns  

Pair Trading with Rocky Brands and Levi Strauss

The main advantage of trading using opposite Rocky Brands and Levi Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, Levi Strauss 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 Levi Strauss will offset losses from the drop in Levi Strauss' long position.
The idea behind Rocky Brands and Levi Strauss Co 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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