Correlation Between Steven Madden and Weibo Corp

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

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

Diversification Opportunities for Steven Madden and Weibo Corp

0.24

Correlation Coefficient

Steven Madden  Weibo Corp

Modest diversification

The 3 months correlation between Steven and Weibo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Steven Madden i.e., Steven Madden and Weibo Corp go up and down completely randomly.

Pair Corralation between Steven Madden and Weibo Corp

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Weibo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 2.19 times less risky than Weibo Corp. The stock trades about -0.12 of its potential returns per unit of risk. The Weibo Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,008  in Weibo Corp on September 28, 2024 and sell it today you would lose (24.00) from holding Weibo Corp or give up 2.38% 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.  Weibo Corp

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 uncertain performance in the last few months, the Stock's basic 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.

Weibo Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steven Madden and Weibo Corp

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

The idea behind Steven Madden and Weibo Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.