Correlation Between Deckers Outdoor and ATT
Can any of the company-specific risk be diversified away by investing in both Deckers Outdoor and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deckers Outdoor and ATT Inc, you can compare the effects of market volatilities on Deckers Outdoor and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deckers Outdoor and ATT.
Diversification Opportunities for Deckers Outdoor and ATT
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Deckers and ATT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and ATT go up and down completely randomly.
Pair Corralation between Deckers Outdoor and ATT
Given the investment horizon of 90 days Deckers Outdoor is expected to generate 1.22 times more return on investment than ATT. However, Deckers Outdoor is 1.22 times more volatile than ATT Inc. It trades about 0.4 of its potential returns per unit of risk. ATT Inc is currently generating about 0.18 per unit of risk. If you would invest 17,708 in Deckers Outdoor on September 12, 2024 and sell it today you would earn a total of 2,787 from holding Deckers Outdoor or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deckers Outdoor vs. ATT Inc
Performance |
| Timeline |
| Deckers Outdoor |
| ATT Inc |
Deckers Outdoor and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deckers Outdoor and ATT
The main advantage of trading using opposite Deckers Outdoor and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deckers Outdoor position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Deckers Outdoor vs. On Holding | Deckers Outdoor vs. Skechers USA | Deckers Outdoor vs. Nike Inc | Deckers Outdoor vs. Steven Madden |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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