Correlation Between United Homes and Skechers USA
Can any of the company-specific risk be diversified away by investing in both United Homes 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 United Homes and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Skechers USA, you can compare the effects of market volatilities on United Homes 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 United Homes with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Skechers USA.
Diversification Opportunities for United Homes and Skechers USA
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Skechers is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and United Homes 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 United Homes Group 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 United Homes i.e., United Homes and Skechers USA go up and down completely randomly.
Pair Corralation between United Homes and Skechers USA
Considering the 90-day investment horizon United Homes Group is expected to generate 2.71 times more return on investment than Skechers USA. However, United Homes is 2.71 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 566.00 in United Homes Group on August 30, 2024 and sell it today you would earn a total of 46.00 from holding United Homes Group or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. Skechers USA
Performance |
| Timeline |
| United Homes Group |
| Skechers USA |
United Homes and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Skechers USA
The main advantage of trading using opposite United Homes and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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.| United Homes vs. VF Corporation | United Homes vs. Levi Strauss Co | United Homes vs. Under Armour A | United Homes vs. Columbia Sportswear |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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