Correlation Between Royal Bank and Skechers USA

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

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

Diversification Opportunities for Royal Bank and Skechers USA

0.0

Correlation Coefficient

Royal Bank  Skechers USA

Pay attention - limited upside

The 3 months correlation between Royal and Skechers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Royal Bank 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 Royal Bank of 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 Royal Bank i.e., Royal Bank and Skechers USA go up and down completely randomly.

Pair Corralation between Royal Bank and Skechers USA

If you would invest  4,922  in Skechers USA on October 23, 2024 and sell it today you would earn a total of  2,074  from holding Skechers USA or generate 42.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Royal Bank of  vs.  Skechers USA

Royal Bank

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Royal Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Royal Bank 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

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 Royal Bank and Skechers USA

The main advantage of trading using opposite Royal Bank and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank 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 Royal Bank of 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.