Correlation Between Under Armour and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Skechers USA, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Skechers USA.
Diversification Opportunities for Under Armour and Skechers USA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Under and Skechers is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Skechers USA go up and down completely randomly.
Pair Corralation between Under Armour and Skechers USA
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 3.74 times more return on investment than Skechers USA. However, Under Armour is 3.74 times more volatile than Skechers USA. It trades about 0.1 of its potential returns per unit of risk. Skechers USA is currently generating about 0.11 per unit of risk. If you would invest 801.00 in Under Armour C on August 31, 2024 and sell it today you would earn a total of 76.00 from holding Under Armour C or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Skechers USA
Performance |
| Timeline |
| Under Armour C |
| Skechers USA |
Under Armour and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Skechers USA
The main advantage of trading using opposite Under Armour and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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