Correlation Between Crocs and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Crocs and Stone Harbor 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 Crocs and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crocs Inc and Stone Harbor Emerging, you can compare the effects of market volatilities on Crocs and Stone Harbor 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 Crocs with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Stone Harbor.
Diversification Opportunities for Crocs and Stone Harbor
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Crocs and Stone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging and Crocs 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 Crocs Inc are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Crocs i.e., Crocs and Stone Harbor go up and down completely randomly.
Pair Corralation between Crocs and Stone Harbor
Given the investment horizon of 90 days Crocs Inc is expected to generate 3.66 times more return on investment than Stone Harbor. However, Crocs is 3.66 times more volatile than Stone Harbor Emerging. It trades about 0.06 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about -0.04 per unit of risk. If you would invest 5,576 in Crocs Inc on January 20, 2024 and sell it today you would earn a total of 6,532 from holding Crocs Inc or generate 117.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.53% |
| Values | Daily Returns |
Crocs Inc vs. Stone Harbor Emerging
Performance |
| Timeline |
| Crocs Inc |
| Stone Harbor Emerging |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Crocs and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crocs and Stone Harbor
The main advantage of trading using opposite Crocs and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.The idea behind Crocs Inc and Stone Harbor Emerging 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.| Stone Harbor vs. Aqr Global Equity | Stone Harbor vs. Dreyfusstandish Global Fixed | Stone Harbor vs. Alliancebernstein Global High | Stone Harbor vs. Ab Global Bond |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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