Correlation Between Rocky Brands and Everus Construction

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

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

Diversification Opportunities for Rocky Brands and Everus Construction

0.59

Correlation Coefficient

Rocky Brands  Everus Construction

Very weak diversification

The 3 months correlation between Rocky and Everus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Rocky Brands i.e., Rocky Brands and Everus Construction go up and down completely randomly.

Pair Corralation between Rocky Brands and Everus Construction

Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Everus Construction. In addition to that, Rocky Brands is 1.1 times more volatile than Everus Construction Group. It trades about -0.09 of its total potential returns per unit of risk. Everus Construction Group is currently generating about 0.28 per unit of volatility. If you would invest  4,900  in Everus Construction Group on September 19, 2024 and sell it today you would earn a total of  2,067  from holding Everus Construction Group or generate 42.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.14%
Values	Daily Returns

Rocky Brands  vs.  Everus Construction Group

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.

Everus Construction

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Brands and Everus Construction

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

The idea behind Rocky Brands and Everus Construction Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.