Correlation Between Adidas AG and Steven Madden
Can any of the company-specific risk be diversified away by investing in both Adidas AG 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 Adidas AG and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG and Steven Madden, you can compare the effects of market volatilities on Adidas AG 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 Adidas AG with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and Steven Madden.
Diversification Opportunities for Adidas AG and Steven Madden
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adidas and Steven is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Adidas AG 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 Adidas AG 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 Adidas AG i.e., Adidas AG and Steven Madden go up and down completely randomly.
Pair Corralation between Adidas AG and Steven Madden
Assuming the 90 days horizon Adidas AG is expected to generate 1.49 times more return on investment than Steven Madden. However, Adidas AG is 1.49 times more volatile than Steven Madden. It trades about 0.03 of its potential returns per unit of risk. Steven Madden is currently generating about 0.04 per unit of risk. If you would invest 20,405 in Adidas AG on August 24, 2024 and sell it today you would earn a total of 2,320 from holding Adidas AG or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adidas AG vs. Steven Madden
Performance |
| Timeline |
| Adidas AG |
| Steven Madden |
Adidas AG and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adidas AG and Steven Madden
The main advantage of trading using opposite Adidas AG and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG 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.| Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Adidas AG ADR |
| Steven Madden vs. Wolverine World Wide | Steven Madden vs. Caleres | Steven Madden vs. Weyco Group | Steven Madden vs. Designer Brands |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |