Correlation Between Adidas AG and Deckers Outdoor

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

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

Diversification Opportunities for Adidas AG and Deckers Outdoor

0.22

Correlation Coefficient

Adidas AG  Deckers Outdoor

Modest diversification

The 3 months correlation between Adidas and Deckers is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG ADR and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor and Adidas AG 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 Adidas AG ADR are associated (or correlated) with Deckers Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deckers Outdoor has no effect on the direction of Adidas AG i.e., Adidas AG and Deckers Outdoor go up and down completely randomly.

Pair Corralation between Adidas AG and Deckers Outdoor

Assuming the 90 days horizon Adidas AG ADR is expected to under-perform the Deckers Outdoor. But the otc stock apears to be less risky and, when comparing its historical volatility, Adidas AG ADR is 1.73 times less risky than Deckers Outdoor. The otc stock trades about -0.13 of its potential returns per unit of risk. The Deckers Outdoor is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  12,086  in Deckers Outdoor on May 7, 2025 and sell it today you would lose (1,573) from holding Deckers Outdoor or give up 13.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Adidas AG ADR  vs.  Deckers Outdoor

Adidas AG ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Adidas AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Deckers Outdoor

Risk-Adjusted Performance

Weakest

Over the last 90 days Deckers Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Adidas AG and Deckers Outdoor

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

The idea behind Adidas AG ADR and Deckers Outdoor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.