Correlation Between Phoenix Footwear and Deckers Outdoor

Can any of the company-specific risk be diversified away by investing in both Phoenix Footwear and Deckers Outdoor 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 Phoenix Footwear and Deckers Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Phoenix Footwear Group and Deckers Outdoor, you can compare the effects of market volatilities on Phoenix Footwear and Deckers Outdoor 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 Phoenix Footwear with a short position of Deckers Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Footwear and Deckers Outdoor.

Diversification Opportunities for Phoenix Footwear and Deckers Outdoor

-0.32

Correlation Coefficient

Phoenix Footwear  Deckers Outdoor

Very good diversification

The 3 months correlation between Phoenix and Deckers is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Footwear Group and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor and Phoenix Footwear 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 Phoenix Footwear Group are associated (or correlated) with Deckers Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deckers Outdoor has no effect on the direction of Phoenix Footwear i.e., Phoenix Footwear and Deckers Outdoor go up and down completely randomly.

Pair Corralation between Phoenix Footwear and Deckers Outdoor

If you would invest  15,628  in Deckers Outdoor on September 16, 2024 and sell it today you would earn a total of  5,035  from holding Deckers Outdoor or generate 32.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Phoenix Footwear Group  vs.  Deckers Outdoor

Phoenix Footwear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Footwear Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Phoenix Footwear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Deckers Outdoor

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deckers Outdoor are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Deckers Outdoor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix Footwear and Deckers Outdoor

The main advantage of trading using opposite Phoenix Footwear and Deckers Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Footwear position performs unexpectedly, Deckers Outdoor 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 Deckers Outdoor will offset losses from the drop in Deckers Outdoor's long position.

The idea behind Phoenix Footwear Group and Deckers Outdoor 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.