Correlation Between Skechers USA and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Grocery Outlet Holding, you can compare the effects of market volatilities on Skechers USA and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Grocery Outlet.
Diversification Opportunities for Skechers USA and Grocery Outlet
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Skechers and Grocery is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Skechers USA i.e., Skechers USA and Grocery Outlet go up and down completely randomly.
Pair Corralation between Skechers USA and Grocery Outlet
Considering the 90-day investment horizon Skechers USA is expected to generate 0.58 times more return on investment than Grocery Outlet. However, Skechers USA is 1.71 times less risky than Grocery Outlet. It trades about 0.41 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.08 per unit of risk. If you would invest 6,101 in Skechers USA on September 12, 2024 and sell it today you would earn a total of 986.00 from holding Skechers USA or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. Grocery Outlet Holding
Performance |
| Timeline |
| Skechers USA |
| Grocery Outlet Holding |
Skechers USA and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Grocery Outlet
The main advantage of trading using opposite Skechers USA and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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