Correlation Between Skechers USA and Eldorado Gold

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

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

Diversification Opportunities for Skechers USA and Eldorado Gold

0.1

Correlation Coefficient

Skechers USA  Eldorado Gold

Average diversification

The 3 months correlation between Skechers and Eldorado is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Skechers USA i.e., Skechers USA and Eldorado Gold go up and down completely randomly.

Pair Corralation between Skechers USA and Eldorado Gold

Considering the 90-day investment horizon Skechers USA is expected to under-perform the Eldorado Gold. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 1.11 times less risky than Eldorado Gold. The stock trades about -0.09 of its potential returns per unit of risk. The Eldorado Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Eldorado Gold Corp on December 28, 2024 and sell it today you would earn a total of  207.00  from holding Eldorado Gold Corp or generate 14.08% return on investment over 90 days.

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

Skechers USA  vs.  Eldorado Gold Corp

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.

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Skechers USA and Eldorado Gold

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

The idea behind Skechers USA and Eldorado Gold Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.