Correlation Between Skechers USA and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Skechers USA and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and RBC Bearings Incorporated, you can compare the effects of market volatilities on Skechers USA and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and RBC Bearings.
Diversification Opportunities for Skechers USA and RBC Bearings
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Skechers and RBC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Skechers USA i.e., Skechers USA and RBC Bearings go up and down completely randomly.
Pair Corralation between Skechers USA and RBC Bearings
Considering the 90-day investment horizon Skechers USA is expected to generate 1.17 times more return on investment than RBC Bearings. However, Skechers USA is 1.17 times more volatile than RBC Bearings Incorporated. It trades about 0.07 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.07 per unit of risk. If you would invest 5,705 in Skechers USA on November 3, 2024 and sell it today you would earn a total of 1,829 from holding Skechers USA or generate 32.06% 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. RBC Bearings Incorporated
Performance |
| Timeline |
| Skechers USA |
| RBC Bearings |
Skechers USA and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and RBC Bearings
The main advantage of trading using opposite Skechers USA and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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