Correlation Between Steven Madden and Greenlane Holdings

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

By analyzing existing cross correlation between Steven Madden and Greenlane Holdings, you can compare the effects of market volatilities on Steven Madden and Greenlane Holdings 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 Greenlane Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Greenlane Holdings.

Diversification Opportunities for Steven Madden and Greenlane Holdings

0.81

Correlation Coefficient

Steven Madden  Greenlane Holdings

Very poor diversification

The 3 months correlation between Steven and Greenlane is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Greenlane Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Holdings 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 Greenlane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Holdings has no effect on the direction of Steven Madden i.e., Steven Madden and Greenlane Holdings go up and down completely randomly.

Pair Corralation between Steven Madden and Greenlane Holdings

Given the investment horizon of 90 days Steven Madden is expected to generate 0.67 times more return on investment than Greenlane Holdings. However, Steven Madden is 1.5 times less risky than Greenlane Holdings. It trades about 0.08 of its potential returns per unit of risk. Greenlane Holdings is currently generating about -0.27 per unit of risk. If you would invest  4,258  in Steven Madden on September 17, 2024 and sell it today you would earn a total of  124.00  from holding Steven Madden or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Steven Madden  vs.  Greenlane Holdings

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 recent stock price disarray, may contribute to short-term losses for the investors.

Greenlane Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenlane Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Steven Madden and Greenlane Holdings

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

The idea behind Steven Madden and Greenlane Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.