Correlation Between Skechers USA and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Shoe Carnival, you can compare the effects of market volatilities on Skechers USA and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Shoe Carnival.
Diversification Opportunities for Skechers USA and Shoe Carnival
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skechers and Shoe is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Skechers USA i.e., Skechers USA and Shoe Carnival go up and down completely randomly.
Pair Corralation between Skechers USA and Shoe Carnival
Considering the 90-day investment horizon Skechers USA is expected to generate 0.68 times more return on investment than Shoe Carnival. However, Skechers USA is 1.47 times less risky than Shoe Carnival. It trades about 0.12 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.02 per unit of risk. If you would invest 6,146 in Skechers USA on September 1, 2024 and sell it today you would earn a total of 236.00 from holding Skechers USA or generate 3.84% 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. Shoe Carnival
Performance |
| Timeline |
| Skechers USA |
| Shoe Carnival |
Skechers USA and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Shoe Carnival
The main advantage of trading using opposite Skechers USA and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Skechers USA vs. Deckers Outdoor | Skechers USA vs. On Holding | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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