Correlation Between Skechers USA and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Spectrum Brands 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 Spectrum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Spectrum Brands Holdings, you can compare the effects of market volatilities on Skechers USA and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Spectrum Brands.
Diversification Opportunities for Skechers USA and Spectrum Brands
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Skechers and Spectrum is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Skechers USA i.e., Skechers USA and Spectrum Brands go up and down completely randomly.
Pair Corralation between Skechers USA and Spectrum Brands
Considering the 90-day investment horizon Skechers USA is expected to generate 1.56 times more return on investment than Spectrum Brands. However, Skechers USA is 1.56 times more volatile than Spectrum Brands Holdings. It trades about -0.09 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.21 per unit of risk. If you would invest 5,640 in Skechers USA on January 11, 2025 and sell it today you would lose (693.00) from holding Skechers USA or give up 12.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. Spectrum Brands Holdings
Performance |
| Timeline |
| Skechers USA |
| Spectrum Brands Holdings |
Skechers USA and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Spectrum Brands
The main advantage of trading using opposite Skechers USA and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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