Correlation Between Deckers Outdoor and Otsuka
Can any of the company-specific risk be diversified away by investing in both Deckers Outdoor and Otsuka 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 Deckers Outdoor and Otsuka into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deckers Outdoor and Otsuka, you can compare the effects of market volatilities on Deckers Outdoor and Otsuka 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 Deckers Outdoor with a short position of Otsuka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deckers Outdoor and Otsuka.
Diversification Opportunities for Deckers Outdoor and Otsuka
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deckers and Otsuka is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Otsuka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka and Deckers Outdoor 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 Deckers Outdoor are associated (or correlated) with Otsuka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and Otsuka go up and down completely randomly.
Pair Corralation between Deckers Outdoor and Otsuka
Given the investment horizon of 90 days Deckers Outdoor is expected to generate 0.06 times more return on investment than Otsuka. However, Deckers Outdoor is 15.81 times less risky than Otsuka. It trades about 0.11 of its potential returns per unit of risk. Otsuka is currently generating about -0.1 per unit of risk. If you would invest 6,477 in Deckers Outdoor on September 12, 2024 and sell it today you would earn a total of 13,735 from holding Deckers Outdoor or generate 212.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.49% |
| Values | Daily Returns |
Deckers Outdoor vs. Otsuka
Performance |
| Timeline |
| Deckers Outdoor |
| Otsuka |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Deckers Outdoor and Otsuka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deckers Outdoor and Otsuka
The main advantage of trading using opposite Deckers Outdoor and Otsuka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deckers Outdoor position performs unexpectedly, Otsuka 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 Otsuka will offset losses from the drop in Otsuka's long position.| Deckers Outdoor vs. On Holding | Deckers Outdoor vs. Skechers USA | Deckers Outdoor vs. Nike Inc | Deckers Outdoor vs. Steven Madden |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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