Correlation Between Deckers Outdoor and Geox SpA

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

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

Diversification Opportunities for Deckers Outdoor and Geox SpA

-0.37

Correlation Coefficient

Deckers Outdoor  Geox SpA

Very good diversification

The 3 months correlation between Deckers and Geox is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Geox SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geox SpA ADR and Deckers Outdoor 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 Deckers Outdoor are associated (or correlated) with Geox SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geox SpA ADR has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and Geox SpA go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Geox SpA

If you would invest  65.00  in Geox SpA ADR on February 7, 2024 and sell it today you would earn a total of  0.00  from holding Geox SpA ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Deckers Outdoor  vs.  Geox SpA ADR

Deckers Outdoor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deckers Outdoor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Deckers Outdoor is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Geox SpA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geox SpA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Deckers Outdoor and Geox SpA

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

The idea behind Deckers Outdoor and Geox SpA ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.