Correlation Between Silo Pharma and Steven Madden

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

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

Diversification Opportunities for Silo Pharma and Steven Madden

0.26

Correlation Coefficient

Silo Pharma  Steven Madden

Modest diversification

The 3 months correlation between Silo and Steven is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Silo Pharma and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Silo Pharma 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 Silo Pharma are associated (or correlated) with Steven Madden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steven Madden has no effect on the direction of Silo Pharma i.e., Silo Pharma and Steven Madden go up and down completely randomly.

Pair Corralation between Silo Pharma and Steven Madden

Given the investment horizon of 90 days Silo Pharma is expected to under-perform the Steven Madden. In addition to that, Silo Pharma is 3.02 times more volatile than Steven Madden. It trades about -0.05 of its total potential returns per unit of risk. Steven Madden is currently generating about -0.1 per unit of volatility. If you would invest  4,788  in Steven Madden on September 21, 2024 and sell it today you would lose (514.00) from holding Steven Madden or give up 10.74% of portfolio value over 90 days.

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

Silo Pharma  vs.  Steven Madden

Silo Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silo Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

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 latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Silo Pharma and Steven Madden

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

The idea behind Silo Pharma and Steven Madden 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.