Correlation Between Evolution Mining and Skechers USA

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

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

Diversification Opportunities for Evolution Mining and Skechers USA

-0.32

Correlation Coefficient

Evolution Mining  Skechers USA

Very good diversification

The 3 months correlation between Evolution and Skechers is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Evolution Mining 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 Evolution Mining are associated (or correlated) with Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Evolution Mining i.e., Evolution Mining and Skechers USA go up and down completely randomly.

Pair Corralation between Evolution Mining and Skechers USA

Assuming the 90 days horizon Evolution Mining is expected to generate 65.72 times less return on investment than Skechers USA. In addition to that, Evolution Mining is 1.68 times more volatile than Skechers USA. It trades about 0.0 of its total potential returns per unit of risk. Skechers USA is currently generating about 0.07 per unit of volatility. If you would invest  6,511  in Skechers USA on October 12, 2024 and sell it today you would earn a total of  420.00  from holding Skechers USA or generate 6.45% return on investment over 90 days.

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

Evolution Mining  vs.  Skechers USA

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Skechers USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skechers USA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Evolution Mining and Skechers USA

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

The idea behind Evolution Mining and Skechers USA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.