Correlation Between Deckers Outdoor and Sekisui House

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

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

Diversification Opportunities for Deckers Outdoor and Sekisui House

-0.74

Correlation Coefficient

Deckers Outdoor  Sekisui House

Pay attention - limited upside

The 3 months correlation between Deckers and Sekisui is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Sekisui House Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House and Deckers Outdoor 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 Deckers Outdoor are associated (or correlated) with Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and Sekisui House go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Sekisui House

Given the investment horizon of 90 days Deckers Outdoor is expected to generate 1.57 times more return on investment than Sekisui House. However, Deckers Outdoor is 1.57 times more volatile than Sekisui House Ltd. It trades about 0.18 of its potential returns per unit of risk. Sekisui House Ltd is currently generating about -0.08 per unit of risk. If you would invest  14,984  in Deckers Outdoor on September 3, 2024 and sell it today you would earn a total of  4,612  from holding Deckers Outdoor or generate 30.78% return on investment over 90 days.

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

Deckers Outdoor  vs.  Sekisui House Ltd

Deckers Outdoor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deckers Outdoor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Deckers Outdoor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Deckers Outdoor and Sekisui House

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

The idea behind Deckers Outdoor and Sekisui House Ltd 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.