Correlation Between Ross Stores and Steven Madden
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Steven Madden, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Steven Madden.
Diversification Opportunities for Ross Stores and Steven Madden
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ross and Steven is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Steven Madden go up and down completely randomly.
Pair Corralation between Ross Stores and Steven Madden
Given the investment horizon of 90 days Ross Stores is expected to generate 0.83 times more return on investment than Steven Madden. However, Ross Stores is 1.2 times less risky than Steven Madden. It trades about 0.04 of its potential returns per unit of risk. Steven Madden is currently generating about 0.01 per unit of risk. If you would invest 15,024 in Ross Stores on August 30, 2024 and sell it today you would earn a total of 465.00 from holding Ross Stores or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Steven Madden
Performance |
| Timeline |
| Ross Stores |
| Steven Madden |
Ross Stores and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Steven Madden
The main advantage of trading using opposite Ross Stores and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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