Correlation Between Skechers USA and GMO Internet
Can any of the company-specific risk be diversified away by investing in both Skechers USA and GMO Internet 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 GMO Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and GMO Internet, you can compare the effects of market volatilities on Skechers USA and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and GMO Internet.
Diversification Opportunities for Skechers USA and GMO Internet
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Skechers and GMO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Skechers USA i.e., Skechers USA and GMO Internet go up and down completely randomly.
Pair Corralation between Skechers USA and GMO Internet
Considering the 90-day investment horizon Skechers USA is expected to generate 0.98 times more return on investment than GMO Internet. However, Skechers USA is 1.02 times less risky than GMO Internet. It trades about 0.06 of its potential returns per unit of risk. GMO Internet is currently generating about 0.0 per unit of risk. If you would invest 5,648 in Skechers USA on October 12, 2024 and sell it today you would earn a total of 1,283 from holding Skechers USA or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.62% |
| Values | Daily Returns |
Skechers USA vs. GMO Internet
Performance |
| Timeline |
| Skechers USA |
| GMO Internet |
Skechers USA and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and GMO Internet
The main advantage of trading using opposite Skechers USA and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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