Correlation Between Globalfoundries and Rocky Brands

Can any of the company-specific risk be diversified away by investing in both Globalfoundries and Rocky Brands 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 Globalfoundries and Rocky Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globalfoundries and Rocky Brands, you can compare the effects of market volatilities on Globalfoundries and Rocky Brands 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 Globalfoundries with a short position of Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Rocky Brands.

Diversification Opportunities for Globalfoundries and Rocky Brands

-0.54

Correlation Coefficient

Globalfoundries  Rocky Brands

Excellent diversification

The 3 months correlation between Globalfoundries and Rocky is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands and Globalfoundries 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 Globalfoundries are associated (or correlated) with Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of Globalfoundries i.e., Globalfoundries and Rocky Brands go up and down completely randomly.

Pair Corralation between Globalfoundries and Rocky Brands

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Rocky Brands. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.66 times less risky than Rocky Brands. The stock trades about 0.0 of its potential returns per unit of risk. The Rocky Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,247  in Rocky Brands on September 20, 2024 and sell it today you would earn a total of  91.00  from holding Rocky Brands or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Globalfoundries  vs.  Rocky Brands

Globalfoundries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rocky Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Globalfoundries and Rocky Brands

The main advantage of trading using opposite Globalfoundries and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, Rocky Brands 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 Rocky Brands will offset losses from the drop in Rocky Brands' long position.

The idea behind Globalfoundries and Rocky Brands 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.