Correlation Between Skechers USA and Zedge

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

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

Diversification Opportunities for Skechers USA and Zedge

-0.04

Correlation Coefficient

Skechers USA  Zedge

Good diversification

The 3 months correlation between Skechers and Zedge is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Skechers USA i.e., Skechers USA and Zedge go up and down completely randomly.

Pair Corralation between Skechers USA and Zedge

Considering the 90-day investment horizon Skechers USA is expected to under-perform the Zedge. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 7.46 times less risky than Zedge. The stock trades about -0.09 of its potential returns per unit of risk. The Zedge Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Zedge Inc on October 7, 2024 and sell it today you would lose (11.00) from holding Zedge Inc or give up 4.01% of portfolio value over 90 days.

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

Skechers USA  vs.  Zedge Inc

Skechers USA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Skechers USA and Zedge

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

The idea behind Skechers USA and Zedge Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.