Correlation Between Designer Brands and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Designer Brands 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 Designer Brands and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Skechers USA, you can compare the effects of market volatilities on Designer Brands 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 Designer Brands with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Skechers USA.
Diversification Opportunities for Designer Brands and Skechers USA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Designer and Skechers is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Skechers USA go up and down completely randomly.
Pair Corralation between Designer Brands and Skechers USA
Considering the 90-day investment horizon Designer Brands is expected to under-perform the Skechers USA. In addition to that, Designer Brands is 1.99 times more volatile than Skechers USA. It trades about -0.1 of its total potential returns per unit of risk. Skechers USA is currently generating about -0.04 per unit of volatility. If you would invest 7,046 in Skechers USA on August 24, 2024 and sell it today you would lose (945.00) from holding Skechers USA or give up 13.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Skechers USA
Performance |
| Timeline |
| Designer Brands |
| Skechers USA |
Designer Brands and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Skechers USA
The main advantage of trading using opposite Designer Brands and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| Skechers USA vs. Wolverine World Wide | Skechers USA vs. Caleres | Skechers USA vs. Weyco Group | 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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