Correlation Between Steven Madden and Logan Ridge

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

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

Diversification Opportunities for Steven Madden and Logan Ridge

0.63

Correlation Coefficient

Steven Madden  Logan Ridge

Poor diversification

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

Pair Corralation between Steven Madden and Logan Ridge

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Logan Ridge. In addition to that, Steven Madden is 1.81 times more volatile than Logan Ridge Finance. It trades about -0.25 of its total potential returns per unit of risk. Logan Ridge Finance is currently generating about -0.12 per unit of volatility. If you would invest  2,444  in Logan Ridge Finance on December 28, 2024 and sell it today you would lose (253.00) from holding Logan Ridge Finance or give up 10.35% of portfolio value over 90 days.

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

Steven Madden  vs.  Logan Ridge Finance

Steven Madden

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Steven Madden and Logan Ridge

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

The idea behind Steven Madden and Logan Ridge Finance 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.

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.