Correlation Between Postal Realty and Skechers USA

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

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

Diversification Opportunities for Postal Realty and Skechers USA

-0.67

Correlation Coefficient

Postal Realty  Skechers USA

Excellent diversification

The 3 months correlation between Postal and Skechers is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Postal Realty 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 Postal Realty Trust 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 Postal Realty i.e., Postal Realty and Skechers USA go up and down completely randomly.

Pair Corralation between Postal Realty and Skechers USA

Given the investment horizon of 90 days Postal Realty Trust is expected to generate 0.79 times more return on investment than Skechers USA. However, Postal Realty Trust is 1.27 times less risky than Skechers USA. It trades about 0.1 of its potential returns per unit of risk. Skechers USA is currently generating about -0.1 per unit of risk. If you would invest  1,260  in Postal Realty Trust on December 21, 2024 and sell it today you would earn a total of  151.00  from holding Postal Realty Trust or generate 11.98% return on investment over 90 days.

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

Postal Realty Trust  vs.  Skechers USA

Postal Realty Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Realty Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Postal Realty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Skechers USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Postal Realty and Skechers USA

The main advantage of trading using opposite Postal Realty and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty 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 Postal Realty Trust 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.