Correlation Between Waste Management and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Skechers USA, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Skechers USA.
Diversification Opportunities for Waste Management and Skechers USA
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and Skechers is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Skechers USA go up and down completely randomly.
Pair Corralation between Waste Management and Skechers USA
Allowing for the 90-day total investment horizon Waste Management is expected to generate 2.22 times less return on investment than Skechers USA. But when comparing it to its historical volatility, Waste Management is 2.48 times less risky than Skechers USA. It trades about 0.35 of its potential returns per unit of risk. Skechers USA is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,726 in Skechers USA on October 24, 2024 and sell it today you would earn a total of 640.00 from holding Skechers USA or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Skechers USA
Performance |
| Timeline |
| Waste Management |
| Skechers USA |
Waste Management and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Skechers USA
The main advantage of trading using opposite Waste Management and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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