Correlation Between BBB Foods and Skechers USA
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Skechers USA, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Skechers USA.
Diversification Opportunities for BBB Foods and Skechers USA
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBB and Skechers is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and Skechers USA go up and down completely randomly.
Pair Corralation between BBB Foods and Skechers USA
Given the investment horizon of 90 days BBB Foods is expected to generate 1.55 times more return on investment than Skechers USA. However, BBB Foods is 1.55 times more volatile than Skechers USA. It trades about 0.09 of its potential returns per unit of risk. Skechers USA is currently generating about 0.03 per unit of risk. If you would invest 1,750 in BBB Foods on September 3, 2024 and sell it today you would earn a total of 1,034 from holding BBB Foods or generate 59.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.4% |
| Values | Daily Returns |
BBB Foods vs. Skechers USA
Performance |
| Timeline |
| BBB Foods |
| Skechers USA |
BBB Foods and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Skechers USA
The main advantage of trading using opposite BBB Foods and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. NetSol Technologies | BBB Foods vs. Analog Devices | BBB Foods vs. FARO Technologies | BBB Foods vs. Getty Images Holdings |
| Skechers USA vs. Designer Brands | Skechers USA vs. Steven Madden | Skechers USA vs. Weyco Group | Skechers USA vs. Rocky 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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