Correlation Between Steven Madden and Raytech Holding
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Raytech Holding 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 Raytech Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Raytech Holding Limited, you can compare the effects of market volatilities on Steven Madden and Raytech Holding 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 Raytech Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Raytech Holding.
Diversification Opportunities for Steven Madden and Raytech Holding
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steven and Raytech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding 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 Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Steven Madden i.e., Steven Madden and Raytech Holding go up and down completely randomly.
Pair Corralation between Steven Madden and Raytech Holding
Given the investment horizon of 90 days Steven Madden is expected to generate 0.39 times more return on investment than Raytech Holding. However, Steven Madden is 2.59 times less risky than Raytech Holding. It trades about 0.04 of its potential returns per unit of risk. Raytech Holding Limited is currently generating about -0.03 per unit of risk. If you would invest 4,497 in Steven Madden on September 1, 2024 and sell it today you would earn a total of 61.00 from holding Steven Madden or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steven Madden vs. Raytech Holding Limited
Performance |
| Timeline |
| Steven Madden |
| Raytech Holding |
Steven Madden and Raytech Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Raytech Holding
The main advantage of trading using opposite Steven Madden and Raytech Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Raytech Holding 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 Raytech Holding will offset losses from the drop in Raytech Holding's long position.| Steven Madden vs. Deckers Outdoor | Steven Madden vs. On Holding | Steven Madden vs. Crocs Inc | Steven Madden vs. Designer Brands |
| Raytech Holding vs. Steven Madden | Raytech Holding vs. Vera Bradley | Raytech Holding vs. Caleres | Raytech Holding vs. Wolverine World Wide |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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