Correlation Between Skechers USA and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Skechers USA and WEC Energy 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 WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and WEC Energy Group, you can compare the effects of market volatilities on Skechers USA and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and WEC Energy.
Diversification Opportunities for Skechers USA and WEC Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skechers and WEC is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Skechers USA i.e., Skechers USA and WEC Energy go up and down completely randomly.
Pair Corralation between Skechers USA and WEC Energy
Considering the 90-day investment horizon Skechers USA is expected to under-perform the WEC Energy. In addition to that, Skechers USA is 2.18 times more volatile than WEC Energy Group. It trades about -0.03 of its total potential returns per unit of risk. WEC Energy Group is currently generating about 0.2 per unit of volatility. If you would invest 7,973 in WEC Energy Group on September 1, 2024 and sell it today you would earn a total of 2,132 from holding WEC Energy Group or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skechers USA vs. WEC Energy Group
Performance |
| Timeline |
| Skechers USA |
| WEC Energy Group |
Skechers USA and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and WEC Energy
The main advantage of trading using opposite Skechers USA and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| Skechers USA vs. Deckers Outdoor | Skechers USA vs. On Holding | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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