Correlation Between Skechers USA and Vita Coco
Can any of the company-specific risk be diversified away by investing in both Skechers USA and Vita Coco 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 Vita Coco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Vita Coco, you can compare the effects of market volatilities on Skechers USA and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Vita Coco.
Diversification Opportunities for Skechers USA and Vita Coco
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Skechers and Vita is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of Skechers USA i.e., Skechers USA and Vita Coco go up and down completely randomly.
Pair Corralation between Skechers USA and Vita Coco
Considering the 90-day investment horizon Skechers USA is expected to under-perform the Vita Coco. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 1.3 times less risky than Vita Coco. The stock trades about -0.04 of its potential returns per unit of risk. The Vita Coco is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,383 in Vita Coco on January 26, 2024 and sell it today you would earn a total of 36.00 from holding Vita Coco or generate 1.51% 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. Vita Coco
Performance |
Timeline |
Skechers USA |
Vita Coco |
Skechers USA and Vita Coco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Skechers USA and Vita Coco
The main advantage of trading using opposite Skechers USA and Vita Coco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA position performs unexpectedly, Vita Coco 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 Vita Coco will offset losses from the drop in Vita Coco's long position.The idea behind Skechers USA and Vita Coco 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.Vita Coco vs. Aquagold International | Vita Coco vs. Morningstar Unconstrained Allocation | Vita Coco vs. Thrivent High Yield | Vita Coco vs. Via Renewables |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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