Correlation Between Skechers USA and INTERNATIONAL

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

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

Diversification Opportunities for Skechers USA and INTERNATIONAL

0.13

Correlation Coefficient

Skechers USA  INTERNATIONAL

Average diversification

The 3 months correlation between Skechers and INTERNATIONAL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and INTERNATIONAL FLAVORS FRAGRANC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL FLAVORS 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL FLAVORS has no effect on the direction of Skechers USA i.e., Skechers USA and INTERNATIONAL go up and down completely randomly.

Pair Corralation between Skechers USA and INTERNATIONAL

Considering the 90-day investment horizon Skechers USA is expected to under-perform the INTERNATIONAL. In addition to that, Skechers USA is 3.05 times more volatile than INTERNATIONAL FLAVORS FRAGRANCES. It trades about -0.08 of its total potential returns per unit of risk. INTERNATIONAL FLAVORS FRAGRANCES is currently generating about -0.09 per unit of volatility. If you would invest  9,782  in INTERNATIONAL FLAVORS FRAGRANCES on December 26, 2024 and sell it today you would lose (505.00) from holding INTERNATIONAL FLAVORS FRAGRANCES or give up 5.16% of portfolio value over 90 days.

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

Skechers USA  vs.  INTERNATIONAL FLAVORS FRAGRANC

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.

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL 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 INTERNATIONAL

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

The idea behind Skechers USA and INTERNATIONAL FLAVORS FRAGRANCES 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.