Correlation Between Steven Madden and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Dow Jones Hong, you can compare the effects of market volatilities on Steven Madden and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Dow Jones.
Diversification Opportunities for Steven Madden and Dow Jones
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steven and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Dow Jones Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Hong 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Hong has no effect on the direction of Steven Madden i.e., Steven Madden and Dow Jones go up and down completely randomly.
Pair Corralation between Steven Madden and Dow Jones
Given the investment horizon of 90 days Steven Madden is expected to under-perform the Dow Jones. In addition to that, Steven Madden is 1.91 times more volatile than Dow Jones Hong. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Hong is currently generating about -0.04 per unit of volatility. If you would invest 740,971 in Dow Jones Hong on September 12, 2024 and sell it today you would lose (7,343) from holding Dow Jones Hong or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steven Madden vs. Dow Jones Hong
Performance |
| Timeline |
Steven Madden and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Steven Madden
Pair trading matchups for Steven Madden
Dow Jones Hong
Pair trading matchups for Dow Jones
Pair Trading with Steven Madden and Dow Jones
The main advantage of trading using opposite Steven Madden and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
| Dow Jones vs. Summit Environmental | Dow Jones vs. Lincoln Electric Holdings | Dow Jones vs. Steven Madden | Dow Jones vs. Timken Company |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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