Correlation Between Skechers USA and Wolverine World
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Wolverine World 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 Wolverine World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Wolverine World Wide, you can compare the effects of market volatilities on Skechers USA and Wolverine World 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 Wolverine World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Wolverine World.
Diversification Opportunities for Skechers USA and Wolverine World
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skechers and Wolverine is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide 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 Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of Skechers USA i.e., Skechers USA and Wolverine World go up and down completely randomly.
Pair Corralation between Skechers USA and Wolverine World
Considering the 90-day investment horizon Skechers USA is expected to under-perform the Wolverine World. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 5.4 times less risky than Wolverine World. The stock trades about 0.0 of its potential returns per unit of risk. The Wolverine World Wide is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,618 in Wolverine World Wide on August 27, 2024 and sell it today you would earn a total of 756.00 from holding Wolverine World Wide or generate 46.72% 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. Wolverine World Wide
Performance |
| Timeline |
| Skechers USA |
| Wolverine World Wide |
Skechers USA and Wolverine World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Wolverine World
The main advantage of trading using opposite Skechers USA and Wolverine World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Wolverine World 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 Wolverine World will offset losses from the drop in Wolverine World's long position.| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
| Wolverine World vs. Weyco Group | Wolverine World vs. Rocky Brands | Wolverine World vs. Vera Bradley | Wolverine World vs. Caleres |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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