Correlation Between Steven Madden and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Unilever PLC 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 Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Unilever PLC ADR, you can compare the effects of market volatilities on Steven Madden and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Unilever PLC.
Diversification Opportunities for Steven Madden and Unilever PLC
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steven and Unilever is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Steven Madden i.e., Steven Madden and Unilever PLC go up and down completely randomly.
Pair Corralation between Steven Madden and Unilever PLC
Given the investment horizon of 90 days Steven Madden is expected to generate 1.81 times more return on investment than Unilever PLC. However, Steven Madden is 1.81 times more volatile than Unilever PLC ADR. It trades about 0.05 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.07 per unit of risk. If you would invest 4,475 in Steven Madden on September 2, 2024 and sell it today you would earn a total of 83.00 from holding Steven Madden or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steven Madden vs. Unilever PLC ADR
Performance |
| Timeline |
| Steven Madden |
| Unilever PLC ADR |
Steven Madden and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steven Madden and Unilever PLC
The main advantage of trading using opposite Steven Madden and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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