Correlation Between Steven Madden and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Ross Stores, you can compare the effects of market volatilities on Steven Madden and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Ross Stores.
Diversification Opportunities for Steven Madden and Ross Stores
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steven and Ross is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Steven Madden i.e., Steven Madden and Ross Stores go up and down completely randomly.
Pair Corralation between Steven Madden and Ross Stores
Given the investment horizon of 90 days Steven Madden is expected to generate 1.4 times less return on investment than Ross Stores. In addition to that, Steven Madden is 1.2 times more volatile than Ross Stores. It trades about 0.02 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.03 per unit of volatility. If you would invest 15,131 in Ross Stores on August 31, 2024 and sell it today you would earn a total of 358.00 from holding Ross Stores or generate 2.37% 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. Ross Stores
Performance |
| Timeline |
| Steven Madden |
| Ross Stores |
Steven Madden and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Ross Stores
The main advantage of trading using opposite Steven Madden and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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