Correlation Between Skechers USA and Legal General
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Legal General 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 Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Legal General Group, you can compare the effects of market volatilities on Skechers USA and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Legal General.
Diversification Opportunities for Skechers USA and Legal General
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skechers and Legal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Skechers USA i.e., Skechers USA and Legal General go up and down completely randomly.
Pair Corralation between Skechers USA and Legal General
Considering the 90-day investment horizon Skechers USA is expected to generate 1.51 times more return on investment than Legal General. However, Skechers USA is 1.51 times more volatile than Legal General Group. It trades about 0.08 of its potential returns per unit of risk. Legal General Group is currently generating about -0.12 per unit of risk. If you would invest 6,186 in Skechers USA on August 28, 2024 and sell it today you would earn a total of 162.00 from holding Skechers USA or generate 2.62% 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. Legal General Group
Performance |
| Timeline |
| Skechers USA |
| Legal General Group |
Skechers USA and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Legal General
The main advantage of trading using opposite Skechers USA and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
| Legal General vs. Blackstone Group | Legal General vs. BlackRock | Legal General vs. Apollo Global Management | Legal General vs. Bank of New |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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