Correlation Between Freeport and Skechers USA

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

By analyzing existing cross correlation between Freeport McMoRan 545 percent and Skechers USA, you can compare the effects of market volatilities on Freeport 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 Freeport with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and Skechers USA.

Diversification Opportunities for Freeport and Skechers USA

-0.03

Correlation Coefficient

Freeport  Skechers USA

Good diversification

The 3 months correlation between Freeport and Skechers is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 545 percent and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Freeport 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 Freeport McMoRan 545 percent 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 Freeport i.e., Freeport and Skechers USA go up and down completely randomly.

Pair Corralation between Freeport and Skechers USA

Assuming the 90 days trading horizon Freeport McMoRan 545 percent is expected to under-perform the Skechers USA. But the bond apears to be less risky and, when comparing its historical volatility, Freeport McMoRan 545 percent is 2.07 times less risky than Skechers USA. The bond trades about -0.06 of its potential returns per unit of risk. The Skechers USA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,236  in Skechers USA on September 21, 2024 and sell it today you would earn a total of  393.00  from holding Skechers USA or generate 6.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Freeport McMoRan 545 percent  vs.  Skechers USA

Freeport McMoRan 545

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 545 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The newest 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 inconsistent forward-looking signals, Skechers USA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Freeport and Skechers USA

The main advantage of trading using opposite Freeport and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport 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 Freeport McMoRan 545 percent 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.