Correlation Between Skechers USA and Wolverine World

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

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

Diversification Opportunities for Skechers USA and Wolverine World

0.91

Correlation Coefficient

Skechers USA  Wolverine World

Almost no diversification

The 3 months correlation between Skechers and Wolverine is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide 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 Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of Skechers USA i.e., Skechers USA and Wolverine World go up and down completely randomly.

Pair Corralation between Skechers USA and Wolverine World

Considering the 90-day investment horizon Skechers USA is expected to generate 0.86 times more return on investment than Wolverine World. However, Skechers USA is 1.17 times less risky than Wolverine World. It trades about -0.09 of its potential returns per unit of risk. Wolverine World Wide is currently generating about -0.22 per unit of risk. If you would invest  6,772  in Skechers USA on December 30, 2024 and sell it today you would lose (1,071) from holding Skechers USA or give up 15.82% of portfolio value over 90 days.

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

Skechers USA  vs.  Wolverine World Wide

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.

Wolverine World Wide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolverine World Wide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Skechers USA and Wolverine World

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

The idea behind Skechers USA and Wolverine World Wide 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.