Correlation Between Xponential Fitness and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness 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 Xponential Fitness and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and Skechers USA, you can compare the effects of market volatilities on Xponential Fitness 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 Xponential Fitness with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Skechers USA.
Diversification Opportunities for Xponential Fitness and Skechers USA
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xponential and Skechers is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Skechers USA go up and down completely randomly.
Pair Corralation between Xponential Fitness and Skechers USA
Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.55 times less return on investment than Skechers USA. In addition to that, Xponential Fitness is 2.68 times more volatile than Skechers USA. It trades about 0.01 of its total potential returns per unit of risk. Skechers USA is currently generating about 0.05 per unit of volatility. If you would invest 4,256 in Skechers USA on September 2, 2024 and sell it today you would earn a total of 2,126 from holding Skechers USA or generate 49.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. Skechers USA
Performance |
| Timeline |
| Xponential Fitness |
| Skechers USA |
Xponential Fitness and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and Skechers USA
The main advantage of trading using opposite Xponential Fitness and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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.The idea behind Xponential Fitness and Skechers USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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