Correlation Between Deckers Outdoor and Samsonite International

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

By analyzing existing cross correlation between Deckers Outdoor and Samsonite International SA, you can compare the effects of market volatilities on Deckers Outdoor and Samsonite International 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 Samsonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deckers Outdoor and Samsonite International.

Diversification Opportunities for Deckers Outdoor and Samsonite International

0.09

Correlation Coefficient

Deckers Outdoor  Samsonite International

Significant diversification

The 3 months correlation between Deckers and Samsonite is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Samsonite International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsonite International 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 Samsonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsonite International has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and Samsonite International go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Samsonite International

Given the investment horizon of 90 days Deckers Outdoor is expected to generate 0.84 times more return on investment than Samsonite International. However, Deckers Outdoor is 1.19 times less risky than Samsonite International. It trades about 0.18 of its potential returns per unit of risk. Samsonite International SA is currently generating about 0.07 per unit of risk. If you would invest  14,984  in Deckers Outdoor on September 2, 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Deckers Outdoor  vs.  Samsonite International SA

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 unfluctuating fundamental indicators, Deckers Outdoor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Samsonite International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsonite International SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Samsonite International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deckers Outdoor and Samsonite International

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

The idea behind Deckers Outdoor and Samsonite International SA 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.