Correlation Between Deckers Outdoor and Mcrae Inds

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

By analyzing existing cross correlation between Deckers Outdoor and Mcrae Inds Cl, you can compare the effects of market volatilities on Deckers Outdoor and Mcrae Inds 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 Mcrae Inds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deckers Outdoor and Mcrae Inds.

Diversification Opportunities for Deckers Outdoor and Mcrae Inds

-0.46

Correlation Coefficient

Deckers Outdoor  Mcrae Inds

Very good diversification

The 3 months correlation between Deckers and Mcrae is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Mcrae Inds Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcrae Inds Cl 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 Mcrae Inds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcrae Inds Cl has no effect on the direction of Deckers Outdoor i.e., Deckers Outdoor and Mcrae Inds go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Mcrae Inds

If you would invest  81,022  in Deckers Outdoor on February 21, 2024 and sell it today you would earn a total of  9,357  from holding Deckers Outdoor or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Deckers Outdoor  vs.  Mcrae Inds Cl

Deckers Outdoor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deckers Outdoor are ranked lower than 3 (%) 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.

Mcrae Inds Cl

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Mcrae Inds Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mcrae Inds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deckers Outdoor and Mcrae Inds

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

The idea behind Deckers Outdoor and Mcrae Inds Cl 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 Stocks Directory module to find actively traded stocks across global markets.