Correlation Between Skechers USA and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Fenbo Holdings 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 Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Fenbo Holdings Limited, you can compare the effects of market volatilities on Skechers USA and Fenbo Holdings 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 Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Fenbo Holdings.
Diversification Opportunities for Skechers USA and Fenbo Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skechers and Fenbo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Skechers USA i.e., Skechers USA and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Skechers USA and Fenbo Holdings
Considering the 90-day investment horizon Skechers USA is expected to generate 0.19 times more return on investment than Fenbo Holdings. However, Skechers USA is 5.36 times less risky than Fenbo Holdings. It trades about -0.05 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.17 per unit of risk. If you would invest 6,692 in Skechers USA on August 30, 2024 and sell it today you would lose (321.00) from holding Skechers USA or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Skechers USA |
| Fenbo Holdings |
Skechers USA and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Fenbo Holdings
The main advantage of trading using opposite Skechers USA and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Skechers USA vs. Steven Madden | Skechers USA vs. Caleres | Skechers USA vs. Weyco Group | Skechers USA vs. Designer Brands |
| Fenbo Holdings vs. Vodka Brands Corp | Fenbo Holdings vs. Vita Coco | Fenbo Holdings vs. National Beverage Corp | Fenbo Holdings vs. Skechers USA |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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