Correlation Between Skechers USA and Telix Pharmaceuticals

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

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

Diversification Opportunities for Skechers USA and Telix Pharmaceuticals

0.28

Correlation Coefficient

Skechers USA  Telix Pharmaceuticals

Modest diversification

The 3 months correlation between Skechers and Telix is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of Skechers USA i.e., Skechers USA and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Skechers USA and Telix Pharmaceuticals

Considering the 90-day investment horizon Skechers USA is expected to generate 0.53 times more return on investment than Telix Pharmaceuticals. However, Skechers USA is 1.87 times less risky than Telix Pharmaceuticals. It trades about -0.09 of its potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about -0.08 per unit of risk. If you would invest  6,917  in Skechers USA on October 4, 2024 and sell it today you would lose (193.00) from holding Skechers USA or give up 2.79% of portfolio value over 90 days.

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

Skechers USA  vs.  Telix Pharmaceuticals Limited

Skechers USA

Risk-Adjusted Performance

0 of 100

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 fairly strong forward-looking signals, Skechers USA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Telix Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Telix Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Skechers USA and Telix Pharmaceuticals

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

The idea behind Skechers USA and Telix Pharmaceuticals Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.