Correlation Between Skechers USA and FLIR Systems

Can any of the company-specific risk be diversified away by investing in both Skechers USA and FLIR Systems 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 FLIR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Skechers USA and FLIR Systems, you can compare the effects of market volatilities on Skechers USA and FLIR Systems 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 FLIR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and FLIR Systems.

Diversification Opportunities for Skechers USA and FLIR Systems

0.0

Correlation Coefficient

Skechers USA  FLIR Systems

Pay attention - limited upside

The 3 months correlation between Skechers and FLIR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and FLIR Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLIR Systems 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 FLIR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLIR Systems has no effect on the direction of Skechers USA i.e., Skechers USA and FLIR Systems go up and down completely randomly.

Pair Corralation between Skechers USA and FLIR Systems

If you would invest  3,551  in Skechers USA on January 31, 2024 and sell it today you would earn a total of  3,068  from holding Skechers USA or generate 86.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Skechers USA  vs.  FLIR Systems

Skechers USA

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward-looking signals, Skechers USA may actually be approaching a critical reversion point that can send shares even higher in May 2024.

FLIR Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLIR Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, FLIR Systems is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Skechers USA and FLIR Systems

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

The idea behind Skechers USA and FLIR Systems 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.