Correlation Between Steven Madden and Ecolab
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Ecolab 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 Steven Madden and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Ecolab Inc, you can compare the effects of market volatilities on Steven Madden and Ecolab 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 Steven Madden with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Ecolab.
Diversification Opportunities for Steven Madden and Ecolab
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steven and Ecolab is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Steven Madden 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 Steven Madden are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Steven Madden i.e., Steven Madden and Ecolab go up and down completely randomly.
Pair Corralation between Steven Madden and Ecolab
Given the investment horizon of 90 days Steven Madden is expected to generate 2.91 times more return on investment than Ecolab. However, Steven Madden is 2.91 times more volatile than Ecolab Inc. It trades about -0.04 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.14 per unit of risk. If you would invest 4,483 in Steven Madden on September 12, 2024 and sell it today you would lose (82.00) from holding Steven Madden or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steven Madden vs. Ecolab Inc
Performance |
| Timeline |
| Steven Madden |
| Ecolab Inc |
Steven Madden and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Ecolab
The main advantage of trading using opposite Steven Madden and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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