Correlation Between 04685A2N0 and Skechers USA

Can any of the company-specific risk be diversified away by investing in both 04685A2N0 and Skechers USA 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 04685A2N0 and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US04685A2N06 and Skechers USA, you can compare the effects of market volatilities on 04685A2N0 and Skechers USA 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 04685A2N0 with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 04685A2N0 and Skechers USA.

Diversification Opportunities for 04685A2N0 and Skechers USA

0.51

Correlation Coefficient

04685A2N0  Skechers USA

Very weak diversification

The 3 months correlation between 04685A2N0 and Skechers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding US04685A2N06 and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and 04685A2N0 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 US04685A2N06 are associated (or correlated) with Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of 04685A2N0 i.e., 04685A2N0 and Skechers USA go up and down completely randomly.

Pair Corralation between 04685A2N0 and Skechers USA

Assuming the 90 days trading horizon 04685A2N0 is expected to generate 13.59 times less return on investment than Skechers USA. But when comparing it to its historical volatility, US04685A2N06 is 25.29 times less risky than Skechers USA. It trades about 0.38 of its potential returns per unit of risk. Skechers USA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,186  in Skechers USA on October 26, 2024 and sell it today you would earn a total of  1,408  from holding Skechers USA or generate 22.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.67%
Values	Daily Returns

US04685A2N06  vs.  Skechers USA

US04685A2N06

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in US04685A2N06 are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 04685A2N0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Skechers USA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skechers USA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 04685A2N0 and Skechers USA

The main advantage of trading using opposite 04685A2N0 and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 04685A2N0 position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.

The idea behind US04685A2N06 and Skechers USA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.