Correlation Between Rocky Brands and Wolverine World
Can any of the company-specific risk be diversified away by investing in both Rocky Brands and Wolverine World 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 Wolverine World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Brands and Wolverine World Wide, you can compare the effects of market volatilities on Rocky Brands and Wolverine World 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 Wolverine World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Brands and Wolverine World.
Diversification Opportunities for Rocky Brands and Wolverine World
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rocky and Wolverine is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide 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 Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of Rocky Brands i.e., Rocky Brands and Wolverine World go up and down completely randomly.
Pair Corralation between Rocky Brands and Wolverine World
Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Wolverine World. But the stock apears to be less risky and, when comparing its historical volatility, Rocky Brands is 1.3 times less risky than Wolverine World. The stock trades about -0.17 of its potential returns per unit of risk. The Wolverine World Wide is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,593 in Wolverine World Wide on August 23, 2024 and sell it today you would earn a total of 695.00 from holding Wolverine World Wide or generate 43.63% 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. Wolverine World Wide
Performance |
| Timeline |
| Rocky Brands |
| Wolverine World Wide |
Rocky Brands and Wolverine World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Brands and Wolverine World
The main advantage of trading using opposite Rocky Brands and Wolverine World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands position performs unexpectedly, Wolverine World 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 Wolverine World will offset losses from the drop in Wolverine World's long position.| Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres | Rocky Brands vs. Weyco Group | Rocky Brands vs. Designer Brands |
| Wolverine World vs. Weyco Group | Wolverine World vs. Rocky Brands | Wolverine World vs. Vera Bradley | Wolverine World vs. Caleres |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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