Correlation Between Tapestry and Deckers Outdoor

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

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

Diversification Opportunities for Tapestry and Deckers Outdoor

-0.34

Correlation Coefficient

Tapestry  Deckers Outdoor

Very good diversification

The 3 months correlation between Tapestry and Deckers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tapestry and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor and Tapestry 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 Tapestry 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 Tapestry i.e., Tapestry and Deckers Outdoor go up and down completely randomly.

Pair Corralation between Tapestry and Deckers Outdoor

Considering the 90-day investment horizon Tapestry is expected to generate 0.55 times more return on investment than Deckers Outdoor. However, Tapestry is 1.82 times less risky than Deckers Outdoor. It trades about 0.32 of its potential returns per unit of risk. Deckers Outdoor is currently generating about -0.03 per unit of risk. If you would invest  7,299  in Tapestry on May 6, 2025 and sell it today you would earn a total of  3,642  from holding Tapestry or generate 49.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tapestry  vs.  Deckers Outdoor

Tapestry

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Deckers Outdoor

Risk-Adjusted Performance

Very Weak

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 Tapestry and Deckers Outdoor

The main advantage of trading using opposite Tapestry and Deckers Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tapestry 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 Tapestry 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.