Correlation Between Altria and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Altria 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 Altria and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Skechers USA, you can compare the effects of market volatilities on Altria 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 Altria with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Skechers USA.
Diversification Opportunities for Altria and Skechers USA
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Altria and Skechers is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Altria 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 Altria Group 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 Altria i.e., Altria and Skechers USA go up and down completely randomly.
Pair Corralation between Altria and Skechers USA
Allowing for the 90-day total investment horizon Altria is expected to generate 2.06 times less return on investment than Skechers USA. But when comparing it to its historical volatility, Altria Group is 2.56 times less risky than Skechers USA. It trades about 0.33 of its potential returns per unit of risk. Skechers USA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,198 in Skechers USA on September 5, 2024 and sell it today you would earn a total of 719.00 from holding Skechers USA or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Skechers USA
Performance |
| Timeline |
| Altria Group |
| Skechers USA |
Altria and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Skechers USA
The main advantage of trading using opposite Altria and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria 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.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| Skechers USA vs. On Holding | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands | Skechers USA vs. Adidas AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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