Correlation Between Skechers USA and Gap,
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Gap, 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 Skechers USA and Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and The Gap,, you can compare the effects of market volatilities on Skechers USA and Gap, 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 Skechers USA with a short position of Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Gap,.
Diversification Opportunities for Skechers USA and Gap,
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Skechers and Gap, is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Skechers USA 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 Skechers USA are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Skechers USA i.e., Skechers USA and Gap, go up and down completely randomly.
Pair Corralation between Skechers USA and Gap,
Considering the 90-day investment horizon Skechers USA is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 1.26 times less risky than Gap,. The stock trades about -0.02 of its potential returns per unit of risk. The The Gap, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,266 in The Gap, on August 31, 2024 and sell it today you would earn a total of 156.00 from holding The Gap, or generate 6.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Skechers USA vs. The Gap,
Performance |
Timeline |
Skechers USA |
Gap, |
Skechers USA and Gap, Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Skechers USA and Gap,
The main advantage of trading using opposite Skechers USA and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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