Correlation Between Natural Alternatives and Steven Madden
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives 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 Natural Alternatives and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and Steven Madden, you can compare the effects of market volatilities on Natural Alternatives 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 Natural Alternatives with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and Steven Madden.
Diversification Opportunities for Natural Alternatives and Steven Madden
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Natural and Steven is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Natural Alternatives 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 Natural Alternatives International 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 Natural Alternatives i.e., Natural Alternatives and Steven Madden go up and down completely randomly.
Pair Corralation between Natural Alternatives and Steven Madden
Given the investment horizon of 90 days Natural Alternatives International is expected to under-perform the Steven Madden. In addition to that, Natural Alternatives is 1.77 times more volatile than Steven Madden. It trades about -0.02 of its total potential returns per unit of risk. Steven Madden is currently generating about 0.05 per unit of volatility. If you would invest 3,174 in Steven Madden on September 2, 2024 and sell it today you would earn a total of 1,384 from holding Steven Madden or generate 43.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Alternatives Internati vs. Steven Madden
Performance |
| Timeline |
| Natural Alternatives |
| Steven Madden |
Natural Alternatives and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Alternatives and Steven Madden
The main advantage of trading using opposite Natural Alternatives and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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.| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Lifeway Foods |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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