Correlation Between Lever Global and Skechers USA

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

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

Diversification Opportunities for Lever Global and Skechers USA

0.38

Correlation Coefficient

Lever Global  Skechers USA

Weak diversification

The 3 months correlation between Lever and Skechers is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lever Global and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Lever Global 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 Lever Global 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 Lever Global i.e., Lever Global and Skechers USA go up and down completely randomly.

Pair Corralation between Lever Global and Skechers USA

Given the investment horizon of 90 days Lever Global is expected to generate 10.9 times more return on investment than Skechers USA. However, Lever Global is 10.9 times more volatile than Skechers USA. It trades about 0.23 of its potential returns per unit of risk. Skechers USA is currently generating about 0.13 per unit of risk. If you would invest  75.00  in Lever Global on October 23, 2024 and sell it today you would earn a total of  248.00  from holding Lever Global or generate 330.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.33%
Values	Daily Returns

Lever Global  vs.  Skechers USA

Lever Global

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Lever Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal technical and fundamental indicators, Lever Global reported solid returns over the last few months and may actually be approaching a breakup point.

Skechers USA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skechers USA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lever Global and Skechers USA

The main advantage of trading using opposite Lever Global and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lever Global 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 Lever Global 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.