Correlation Between Skechers USA and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Unilever PLC 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 Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Unilever PLC ADR, you can compare the effects of market volatilities on Skechers USA and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Unilever PLC.
Diversification Opportunities for Skechers USA and Unilever PLC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skechers and Unilever is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Skechers USA i.e., Skechers USA and Unilever PLC go up and down completely randomly.
Pair Corralation between Skechers USA and Unilever PLC
Considering the 90-day investment horizon Skechers USA is expected to generate 1.43 times more return on investment than Unilever PLC. However, Skechers USA is 1.43 times more volatile than Unilever PLC ADR. It trades about 0.11 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.09 per unit of risk. If you would invest 6,157 in Skechers USA on August 31, 2024 and sell it today you would earn a total of 214.00 from holding Skechers USA or generate 3.48% 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. Unilever PLC ADR
Performance |
| Timeline |
| Skechers USA |
| Unilever PLC ADR |
Skechers USA and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Unilever PLC
The main advantage of trading using opposite Skechers USA and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |