Correlation Between Brunswick and Steven Madden

Can any of the company-specific risk be diversified away by investing in both Brunswick and Steven Madden 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 Brunswick and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brunswick and Steven Madden, you can compare the effects of market volatilities on Brunswick and Steven Madden 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 Brunswick with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Steven Madden.

Diversification Opportunities for Brunswick and Steven Madden

0.63

Correlation Coefficient

Brunswick  Steven Madden

Poor diversification

The 3 months correlation between Brunswick and Steven is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Brunswick 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 Brunswick are associated (or correlated) with Steven Madden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steven Madden has no effect on the direction of Brunswick i.e., Brunswick and Steven Madden go up and down completely randomly.

Pair Corralation between Brunswick and Steven Madden

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Steven Madden. In addition to that, Brunswick is 1.2 times more volatile than Steven Madden. It trades about -0.01 of its total potential returns per unit of risk. Steven Madden is currently generating about 0.04 per unit of volatility. If you would invest  3,214  in Steven Madden on October 4, 2024 and sell it today you would earn a total of  1,038  from holding Steven Madden or generate 32.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Brunswick  vs.  Steven Madden

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Steven Madden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brunswick and Steven Madden

The main advantage of trading using opposite Brunswick and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Steven Madden 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 Steven Madden will offset losses from the drop in Steven Madden's long position.

The idea behind Brunswick and Steven Madden pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.