Correlation Between Good Vibrations and American Rebel

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

By analyzing existing cross correlation between Good Vibrations Shoes and American Rebel Holdings, you can compare the effects of market volatilities on Good Vibrations and American Rebel 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 Good Vibrations with a short position of American Rebel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Vibrations and American Rebel.

Diversification Opportunities for Good Vibrations and American Rebel

-0.36

Correlation Coefficient

Good Vibrations  American Rebel

Very good diversification

The 3 months correlation between Good and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Good Vibrations Shoes and American Rebel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rebel Holdings and Good Vibrations 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 Good Vibrations Shoes are associated (or correlated) with American Rebel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rebel Holdings has no effect on the direction of Good Vibrations i.e., Good Vibrations and American Rebel go up and down completely randomly.

Pair Corralation between Good Vibrations and American Rebel

Given the investment horizon of 90 days Good Vibrations Shoes is expected to generate 0.84 times more return on investment than American Rebel. However, Good Vibrations Shoes is 1.19 times less risky than American Rebel. It trades about 0.12 of its potential returns per unit of risk. American Rebel Holdings is currently generating about -0.06 per unit of risk. If you would invest  0.21  in Good Vibrations Shoes on September 17, 2024 and sell it today you would earn a total of  0.13  from holding Good Vibrations Shoes or generate 61.9% return on investment over 90 days.

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

Good Vibrations Shoes  vs.  American Rebel Holdings

Good Vibrations Shoes

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Good Vibrations Shoes are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Good Vibrations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

American Rebel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Rebel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain somewhat 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 Good Vibrations and American Rebel

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

The idea behind Good Vibrations Shoes and American Rebel Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.