Correlation Between Globalfoundries and Steven Madden
Can any of the company-specific risk be diversified away by investing in both Globalfoundries 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 Globalfoundries and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and Steven Madden, you can compare the effects of market volatilities on Globalfoundries 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 Globalfoundries with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Steven Madden.
Diversification Opportunities for Globalfoundries and Steven Madden
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globalfoundries and Steven is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Steven Madden go up and down completely randomly.
Pair Corralation between Globalfoundries and Steven Madden
Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Steven Madden. In addition to that, Globalfoundries is 1.31 times more volatile than Steven Madden. It trades about -0.03 of its total potential returns per unit of risk. Steven Madden is currently generating about -0.04 per unit of volatility. If you would invest 3,278 in Steven Madden on January 19, 2025 and sell it today you would lose (1,324) from holding Steven Madden or give up 40.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. Steven Madden
Performance |
| Timeline |
| Globalfoundries |
| Steven Madden |
Globalfoundries and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and Steven Madden
The main advantage of trading using opposite Globalfoundries and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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