Correlation Between Skechers USA and 0641594A1

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Can any of the company-specific risk be diversified away by investing in both Skechers USA and 0641594A1 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 0641594A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and BANK OF NOVA, you can compare the effects of market volatilities on Skechers USA and 0641594A1 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 0641594A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and 0641594A1.

Diversification Opportunities for Skechers USA and 0641594A1

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Skechers and 0641594A1 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and BANK OF NOVA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF NOVA 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 0641594A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF NOVA has no effect on the direction of Skechers USA i.e., Skechers USA and 0641594A1 go up and down completely randomly.

Pair Corralation between Skechers USA and 0641594A1

Considering the 90-day investment horizon Skechers USA is expected to generate 2.91 times more return on investment than 0641594A1. However, Skechers USA is 2.91 times more volatile than BANK OF NOVA. It trades about 0.1 of its potential returns per unit of risk. BANK OF NOVA is currently generating about -0.07 per unit of risk. If you would invest  5,946  in Skechers USA on November 3, 2024 and sell it today you would earn a total of  1,588  from holding Skechers USA or generate 26.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Skechers USA  vs.  BANK OF NOVA

 Performance 
       Timeline  
Skechers USA 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skechers USA showed solid returns over the last few months and may actually be approaching a breakup point.
BANK OF NOVA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BANK OF NOVA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANK OF NOVA investors.

Skechers USA and 0641594A1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Skechers USA and 0641594A1

The main advantage of trading using opposite Skechers USA and 0641594A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, 0641594A1 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 0641594A1 will offset losses from the drop in 0641594A1's long position.
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The idea behind Skechers USA and BANK OF NOVA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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