Correlation Between Skechers USA and 743820AA0

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Can any of the company-specific risk be diversified away by investing in both Skechers USA and 743820AA0 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 743820AA0 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and US743820AA01, you can compare the effects of market volatilities on Skechers USA and 743820AA0 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 743820AA0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and 743820AA0.

Diversification Opportunities for Skechers USA and 743820AA0

Skechers743820AA0Diversified AwaySkechers743820AA0Diversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Skechers and 743820AA0 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and US743820AA01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US743820AA01 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 743820AA0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US743820AA01 has no effect on the direction of Skechers USA i.e., Skechers USA and 743820AA0 go up and down completely randomly.

Pair Corralation between Skechers USA and 743820AA0

Considering the 90-day investment horizon Skechers USA is expected to generate 2.34 times more return on investment than 743820AA0. However, Skechers USA is 2.34 times more volatile than US743820AA01. It trades about 0.03 of its potential returns per unit of risk. US743820AA01 is currently generating about 0.02 per unit of risk. If you would invest  4,446  in Skechers USA on December 12, 2024 and sell it today you would earn a total of  1,120  from holding Skechers USA or generate 25.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy67.34%
ValuesDaily Returns

Skechers USA  vs.  US743820AA01

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505101520
JavaScript chart by amCharts 3.21.15SKX 743820AA0
       Timeline  
Skechers USA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar5560657075
US743820AA01 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days US743820AA01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 743820AA0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.1531238485868788899091

Skechers USA and 743820AA0 Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.52-3.38-2.25-1.120.01.012.053.094.145.18 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15SKX 743820AA0
       Returns  

Pair Trading with Skechers USA and 743820AA0

The main advantage of trading using opposite Skechers USA and 743820AA0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, 743820AA0 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 743820AA0 will offset losses from the drop in 743820AA0's long position.
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The idea behind Skechers USA and US743820AA01 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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