Correlation Between Rocky Brands and Meritage
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Meritage 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 Meritage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and Meritage, you can compare the effects of market volatilities on Rocky Brands and Meritage 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 Meritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Meritage.
Diversification Opportunities for Rocky Brands and Meritage
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rocky and Meritage is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Meritage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meritage 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 Meritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meritage has no effect on the direction of Rocky Brands i.e., Rocky Brands and Meritage go up and down completely randomly.
Pair Corralation between Rocky Brands and Meritage
Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Meritage. In addition to that, Rocky Brands is 2.65 times more volatile than Meritage. It trades about -0.11 of its total potential returns per unit of risk. Meritage is currently generating about 0.13 per unit of volatility. If you would invest 18,448 in Meritage on August 28, 2024 and sell it today you would earn a total of 1,138 from holding Meritage or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Brands vs. Meritage
Performance |
| Timeline |
| Rocky Brands |
| Meritage |
Rocky Brands and Meritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and Meritage
The main advantage of trading using opposite Rocky Brands and Meritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, Meritage 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 Meritage will offset losses from the drop in Meritage's long position.| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
| Meritage vs. TRI Pointe Homes | Meritage vs. MI Homes | Meritage vs. Beazer Homes USA | Meritage vs. Century Communities |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets |