Correlation Between Rocky Brands and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Unilever PLC 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 Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and Unilever PLC ADR, you can compare the effects of market volatilities on Rocky Brands and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Unilever PLC.
Diversification Opportunities for Rocky Brands and Unilever PLC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rocky and Unilever is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Rocky Brands i.e., Rocky Brands and Unilever PLC go up and down completely randomly.
Pair Corralation between Rocky Brands and Unilever PLC
Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Unilever PLC. In addition to that, Rocky Brands is 5.58 times more volatile than Unilever PLC ADR. It trades about -0.14 of its total potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.09 per unit of volatility. If you would invest 6,111 in Unilever PLC ADR on August 31, 2024 and sell it today you would lose (137.00) from holding Unilever PLC ADR or give up 2.24% 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. Unilever PLC ADR
Performance |
| Timeline |
| Rocky Brands |
| Unilever PLC ADR |
Rocky Brands and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and Unilever PLC
The main advantage of trading using opposite Rocky Brands and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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