Correlation Between Skechers USA and Ardelyx
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Ardelyx 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 Skechers USA and Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Ardelyx, you can compare the effects of market volatilities on Skechers USA and Ardelyx 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 Skechers USA with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Ardelyx.
Diversification Opportunities for Skechers USA and Ardelyx
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skechers and Ardelyx is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Skechers USA 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 Skechers USA are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Skechers USA i.e., Skechers USA and Ardelyx go up and down completely randomly.
Pair Corralation between Skechers USA and Ardelyx
Considering the 90-day investment horizon Skechers USA is expected to generate 3.32 times less return on investment than Ardelyx. But when comparing it to its historical volatility, Skechers USA is 2.6 times less risky than Ardelyx. It trades about 0.05 of its potential returns per unit of risk. Ardelyx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Ardelyx on September 3, 2024 and sell it today you would earn a total of 369.00 from holding Ardelyx or generate 186.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. Ardelyx
Performance |
| Timeline |
| Skechers USA |
| Ardelyx |
Skechers USA and Ardelyx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Ardelyx
The main advantage of trading using opposite Skechers USA and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.| Skechers USA vs. Designer Brands | Skechers USA vs. Steven Madden | Skechers USA vs. Weyco Group | Skechers USA vs. Rocky Brands |
| Ardelyx vs. BioLineRx | Ardelyx vs. Lexicon Pharmaceuticals | Ardelyx vs. Seres Therapeutics | Ardelyx vs. Immunitybio |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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