Correlation Between Steven Madden and Comstock Holding

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

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

Diversification Opportunities for Steven Madden and Comstock Holding

0.37

Correlation Coefficient

Steven Madden  Comstock Holding

Weak diversification

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

Pair Corralation between Steven Madden and Comstock Holding

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Comstock Holding. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 2.81 times less risky than Comstock Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Comstock Holding Companies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Comstock Holding Companies on September 15, 2024 and sell it today you would lose (20.00) from holding Comstock Holding Companies or give up 2.33% of portfolio value over 90 days.

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

Steven Madden  vs.  Comstock Holding Companies

Steven Madden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Steven Madden is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Comstock Holding Com

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Holding Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Comstock Holding is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Steven Madden and Comstock Holding

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

The idea behind Steven Madden and Comstock Holding Companies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.