Correlation Between 191216DC1 and Skechers USA

Can any of the company-specific risk be diversified away by investing in both 191216DC1 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 191216DC1 and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Skechers USA, you can compare the effects of market volatilities on 191216DC1 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 191216DC1 with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216DC1 and Skechers USA.

Diversification Opportunities for 191216DC1 and Skechers USA

0.08

Correlation Coefficient

191216DC1  Skechers USA

Significant diversification

The 3 months correlation between 191216DC1 and Skechers is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and 191216DC1 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 COCA COLA CO 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 191216DC1 i.e., 191216DC1 and Skechers USA go up and down completely randomly.

Pair Corralation between 191216DC1 and Skechers USA

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 1.25 times more return on investment than Skechers USA. However, 191216DC1 is 1.25 times more volatile than Skechers USA. It trades about 0.22 of its potential returns per unit of risk. Skechers USA is currently generating about 0.17 per unit of risk. If you would invest  6,180  in COCA COLA CO on September 24, 2024 and sell it today you would earn a total of  714.00  from holding COCA COLA CO or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

COCA COLA CO  vs.  Skechers USA

COCA A CO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 191216DC1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with 191216DC1 and Skechers USA

The main advantage of trading using opposite 191216DC1 and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216DC1 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 COCA COLA CO 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..