Correlation Between Steven Madden and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Shoe Carnival, you can compare the effects of market volatilities on Steven Madden and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Shoe Carnival.
Diversification Opportunities for Steven Madden and Shoe Carnival
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steven and Shoe is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Steven Madden i.e., Steven Madden and Shoe Carnival go up and down completely randomly.
Pair Corralation between Steven Madden and Shoe Carnival
Given the investment horizon of 90 days Steven Madden is expected to generate 1.34 times less return on investment than Shoe Carnival. But when comparing it to its historical volatility, Steven Madden is 1.47 times less risky than Shoe Carnival. It trades about 0.05 of its potential returns per unit of risk. Shoe Carnival is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,323 in Shoe Carnival on September 4, 2024 and sell it today you would earn a total of 1,237 from holding Shoe Carnival or generate 53.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steven Madden vs. Shoe Carnival
Performance |
| Timeline |
| Steven Madden |
| Shoe Carnival |
Steven Madden and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Shoe Carnival
The main advantage of trading using opposite Steven Madden and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
| Shoe Carnival vs. Appian Corp | Shoe Carnival vs. Okta Inc | Shoe Carnival vs. MongoDB | Shoe Carnival vs. Twilio Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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