Correlation Between Steven Madden and Foraco International
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Foraco International 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 Foraco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Foraco International SA, you can compare the effects of market volatilities on Steven Madden and Foraco International 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 Foraco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Foraco International.
Diversification Opportunities for Steven Madden and Foraco International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steven and Foraco is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International 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 Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of Steven Madden i.e., Steven Madden and Foraco International go up and down completely randomly.
Pair Corralation between Steven Madden and Foraco International
Given the investment horizon of 90 days Steven Madden is expected to generate 0.86 times more return on investment than Foraco International. However, Steven Madden is 1.17 times less risky than Foraco International. It trades about 0.07 of its potential returns per unit of risk. Foraco International SA is currently generating about -0.01 per unit of risk. If you would invest 4,489 in Steven Madden on September 5, 2024 and sell it today you would earn a total of 112.00 from holding Steven Madden or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steven Madden vs. Foraco International SA
Performance |
| Timeline |
| Steven Madden |
| Foraco International |
Steven Madden and Foraco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Foraco International
The main advantage of trading using opposite Steven Madden and Foraco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Foraco International 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 Foraco International will offset losses from the drop in Foraco International's long position.| Steven Madden vs. On Holding | Steven Madden vs. Crocs Inc | Steven Madden vs. Designer Brands | Steven Madden vs. Adidas AG |
| Foraco International vs. Steven Madden | Foraco International vs. Copa Holdings SA | Foraco International vs. JetBlue Airways Corp | Foraco International vs. PVH Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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