Correlation Between Southwest Gas and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Southwest Gas and Skechers USA 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 Southwest Gas and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and Skechers USA, you can compare the effects of market volatilities on Southwest Gas and Skechers USA 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 Southwest Gas with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and Skechers USA.
Diversification Opportunities for Southwest Gas and Skechers USA
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Skechers is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Southwest Gas 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 Southwest Gas Holdings are associated (or correlated) with Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Southwest Gas i.e., Southwest Gas and Skechers USA go up and down completely randomly.
Pair Corralation between Southwest Gas and Skechers USA
Considering the 90-day investment horizon Southwest Gas Holdings is expected to generate 0.44 times more return on investment than Skechers USA. However, Southwest Gas Holdings is 2.29 times less risky than Skechers USA. It trades about 0.13 of its potential returns per unit of risk. Skechers USA is currently generating about -0.17 per unit of risk. If you would invest 6,787 in Southwest Gas Holdings on December 11, 2024 and sell it today you would earn a total of 492.00 from holding Southwest Gas Holdings or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Gas Holdings vs. Skechers USA
Performance |
| Timeline |
| Southwest Gas Holdings |
| Skechers USA |
Southwest Gas and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and Skechers USA
The main advantage of trading using opposite Southwest Gas and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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