Correlation Between Skechers USA and PlayAGS

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

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

Diversification Opportunities for Skechers USA and PlayAGS

-0.33

Correlation Coefficient

Skechers USA  PlayAGS

Very good diversification

The 3 months correlation between Skechers and PlayAGS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Skechers USA 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 Skechers USA are associated (or correlated) with PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Skechers USA i.e., Skechers USA and PlayAGS go up and down completely randomly.

Pair Corralation between Skechers USA and PlayAGS

Considering the 90-day investment horizon Skechers USA is expected to under-perform the PlayAGS. In addition to that, Skechers USA is 8.37 times more volatile than PlayAGS. It trades about -0.08 of its total potential returns per unit of risk. PlayAGS is currently generating about 0.27 per unit of volatility. If you would invest  1,150  in PlayAGS on December 29, 2024 and sell it today you would earn a total of  62.00  from holding PlayAGS or generate 5.39% return on investment over 90 days.

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

Skechers USA  vs.  PlayAGS

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.

PlayAGS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Skechers USA and PlayAGS

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

The idea behind Skechers USA and PlayAGS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.