Correlation Between BW Offshore and Skechers USA
Can any of the company-specific risk be diversified away by investing in both BW Offshore 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 BW Offshore and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore Limited and Skechers USA, you can compare the effects of market volatilities on BW Offshore 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 BW Offshore with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Skechers USA.
Diversification Opportunities for BW Offshore and Skechers USA
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BWOFY and Skechers is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and BW Offshore 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 BW Offshore Limited 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 BW Offshore i.e., BW Offshore and Skechers USA go up and down completely randomly.
Pair Corralation between BW Offshore and Skechers USA
Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the Skechers USA. But the pink sheet apears to be less risky and, when comparing its historical volatility, BW Offshore Limited is 1.3 times less risky than Skechers USA. The pink sheet trades about -0.15 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 6,186 in Skechers USA on August 28, 2024 and sell it today you would earn a total of 162.00 from holding Skechers USA or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. Skechers USA
Performance |
| Timeline |
| BW Offshore Limited |
| Skechers USA |
BW Offshore and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Skechers USA
The main advantage of trading using opposite BW Offshore and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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.| BW Offshore vs. Figs Inc | BW Offshore vs. Lion One Metals | BW Offshore vs. Boot Barn Holdings | BW Offshore vs. Burlington Stores |
| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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