Correlation Between Skechers USA and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Babcock Wilcox 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 Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Skechers USA and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Babcock Wilcox.
Diversification Opportunities for Skechers USA and Babcock Wilcox
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skechers and Babcock is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Skechers USA i.e., Skechers USA and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Skechers USA and Babcock Wilcox
Considering the 90-day investment horizon Skechers USA is expected to generate 1.51 times more return on investment than Babcock Wilcox. However, Skechers USA is 1.51 times more volatile than Babcock Wilcox Enterprises. It trades about 0.37 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.05 per unit of risk. If you would invest 6,157 in Skechers USA on September 15, 2024 and sell it today you would earn a total of 878.00 from holding Skechers USA or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Skechers USA |
| Babcock Wilcox Enter |
Skechers USA and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Babcock Wilcox
The main advantage of trading using opposite Skechers USA and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.| Skechers USA vs. On Holding | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands | Skechers USA vs. Adidas AG |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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