Correlation Between Steven Madden and Nike

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

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

Diversification Opportunities for Steven Madden and Nike

0.77

Correlation Coefficient

Steven Madden  Nike

Poor diversification

The 3 months correlation between Steven and Nike is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Steven Madden i.e., Steven Madden and Nike go up and down completely randomly.

Pair Corralation between Steven Madden and Nike

Given the investment horizon of 90 days Steven Madden is expected to generate 1.01 times more return on investment than Nike. However, Steven Madden is 1.01 times more volatile than Nike Inc. It trades about 0.03 of its potential returns per unit of risk. Nike Inc is currently generating about -0.02 per unit of risk. If you would invest  4,431  in Steven Madden on September 2, 2024 and sell it today you would earn a total of  127.00  from holding Steven Madden or generate 2.87% return on investment over 90 days.

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

Steven Madden  vs.  Nike Inc

Steven Madden

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steven Madden are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Steven Madden and Nike

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

The idea behind Steven Madden and Nike Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.