Correlation Between 05526DBJ3 and Steven Madden

Can any of the company-specific risk be diversified away by investing in both 05526DBJ3 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 05526DBJ3 and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAT CAPITAL P and Steven Madden, you can compare the effects of market volatilities on 05526DBJ3 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 05526DBJ3 with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05526DBJ3 and Steven Madden.

Diversification Opportunities for 05526DBJ3 and Steven Madden

0.12

Correlation Coefficient

05526DBJ3  Steven Madden

Average diversification

The 3 months correlation between 05526DBJ3 and Steven is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BAT CAPITAL P and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and 05526DBJ3 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 BAT CAPITAL P 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 05526DBJ3 i.e., 05526DBJ3 and Steven Madden go up and down completely randomly.

Pair Corralation between 05526DBJ3 and Steven Madden

Assuming the 90 days trading horizon BAT CAPITAL P is expected to under-perform the Steven Madden. But the bond apears to be less risky and, when comparing its historical volatility, BAT CAPITAL P is 4.08 times less risky than Steven Madden. The bond trades about -0.12 of its potential returns per unit of risk. The Steven Madden is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,376  in Steven Madden on September 4, 2024 and sell it today you would earn a total of  225.00  from holding Steven Madden or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BAT CAPITAL P  vs.  Steven Madden

BAT CAPITAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAT CAPITAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05526DBJ3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Steven Madden

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steven Madden are ranked lower than 4 (%) 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.

Pair Trading with 05526DBJ3 and Steven Madden

The main advantage of trading using opposite 05526DBJ3 and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05526DBJ3 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 BAT CAPITAL P 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.